Your mortgage interest relief, tax, pension, education and social welfare questions answered – The Irish Times
That’s all for today. Thanks very much for your queries. If you have a query that has not been covered here, you can send it to Dominic Coyle at [email protected] and he will endeavour to answer it in his Q&A column. Thanks for reading.
Key reads
Landlord Tax Relief
Q. Is the landlord relief the €14,000 tax free as before, plus what was announced yesterday?
From Martin
A. You’re conflating two separate things here. The tax free €14,000 is Rent a Room relief, which is available to any homeowner or, with the landlord’s permission, any tenant who lets out a room in their home to someone else while they are also living there.
The landlord relief – Rented Residential Relief – is available to landlord who lets out an entire property or properties to tenants. Nothing of course to say that a landlord cannot also accommodate someone in their own house under rent a room relief but they are quite distinct reliefs and most unlikely to be claimed by the same person. – DC
Interest Relief for First-Time Buyers
Q. We took on a mortgage as first time buyers in April 2023.
We are on a variable rate and paying high interest costs.
Will there be any allowance made for people in our scenario where we weren’t paying a mortgage in 2022 and therefore have nothing to compare to? Perhaps a benchmark average amount be used in this scenario to allow us to claim relief too. We paid 18 per cent over the asking price to secure the house (not even in Dublin, based in Munster) in an extremely competitive bidding process and then had to face exceptionally high interest rates.
It feels unfair if people like us are excluded from this relief.
From Kate
A. Sorry, Kate but if you have no interest bill for 2022 then you will not qualify for the mortgage interest relief measure, unfair as that might seem as you juggle with current high mortgage rate sin the early days of your home ownership. – DC
Fixed Rate Mortgages
Q. I am on a fixed-rate mortgage of €1,171.21 per month. Do the measures in the budget affect me? I have a balance of €124,700.
From Ray
A. If you are on the same fixed rate this year as you had last year, there will be no increase in your interest bill and you will not be in line for any relief under the mortgage interest measure announced in the budget, Ray. – DC
Fuel Allowance Lump Sum
Q. Is the €300 Fuel Allowance lump sum over and above the annual Fuel Allowance already in place? Thank you for your help.
From David
A. The €300 lump sum payment to those people in receipt of Fuel Allowance comes on top of the €33 weekly payment they already receive over the winter season. It will be paid before the end of the year, according to the Minister. – DC
Tax Relief for New Landlords
Q. Will the rent tax relief for landlords proposed for periods 2024 to 2028 apply to new landlords entering the market or only existing landlords?
From James
A. There is nothing in the details available so far to suggest it is restricted to current landlords. But there is a provision that any property being rented out by a landlord will have to be available to the rental market for four years from the time of an initial claim for relief under this measure. As we have said elsewhere, we expect more details on the Rented Residential Relief as it is called – presumably because Government is keen not to draw attention to the word “landlord” – between now and publication of the Finance Bill late next week. – DC
Principle Private Residence
Q. I rent out my Celtic Tiger apartment, which is on a tracker, while renting a house. Can this be classed as my Principle Private Residence (PPR)?
From Conor
A. A PPR is a house or apartment that you own and occupy as your only, or main, residence. If your apartment is rented out and you live in another property, it would not be regarded as your PPR. – MH
Tax Rate for Landlords
Q. Is the 20 per cent tax rate on rental income per property or on the first €3,000 rental income on the combined rental revenue?
From John
A. The Rented Residential Relief will apply to a landlord’s rental income as a whole rather than on a property by property basis.
In the first year, €3,000 of landlords’ rental income will be taxed at the standard 20 per cent rate rather than the higher rate, resulting in an additional €600 to the landlord. This will increase to €4,000 in 2025, resulting in a benefit of €800 to landlords, before rising again to €5,000 in both 2026 and 2027, which will result in a €1,000 annual benefit in those years. – MH
Climate Action Fund and Retrofitting
Q. This new Climate Action Fund is interesting. When are we likely to see increased grants/support for retrofitting homes?
The current grants are not anywhere near sufficient to support external insulation. I’d like to get this done and I am wondering when we will have more specifics on this type of thing?
From Kristin
A. There was no information provided on any extension in funding, support or grant aid for retrofitting homes in the budget – at least not in the private sector. No timeline was provided or even any commitment to enhanced financial support. – DC
Mortgage Interest Relief
Q. I paid a lump sum off my mortgage on my principal private residence last year which brought me below the €80,000 threshold outlined in the Budget. Will I be able to claim the relief anyway?
From Brendan
A. If the amount outstanding on your home loan was less than €80,000 at the end of last year, as you suggest it was, then you will not qualify for the mortgage interest relief. – DC
Parents and the Rent Tax Credit
Q. The Rent Tax Credit will be extended to parents who pay for rented accommodation for their student children under the Rent a Room scheme and for ‘digs’. What does ‘digs’ mean? If we pay for our daughter in standard rented accommodation, does this meet the criteria for ‘digs?
From Richard
A. You’re correct that the Government has extended the scope of the rent tax credit so that parents whose student children are renting a room in someone’s home or who are staying in digs – slang for an arrangement where they pay for food and board in a family home – will be eligible to claim the rent tax credit.
They can apply retrospectively for this credit in respect of 2022 and 2023, when it was available at a rate of €500. To apply, you can either fill out an annual tax return or, if you are taxed under the PAYE system, you can claim in real time claims through your Revenue myAccount.
Digs does not mean standard rented accommodation or a shared house with other students, or campus accommodation. But all those are already separately covered under the credit, which will now be available at a higher rate of €750 from next year. – DC
Living Alone Allowance Increase?
Q. Did Living Alone allowance increase?
From Brendan
A. No, there was no increase in the €22 weekly rate for the Living Alone allowance. However, anyone in receipt of the allowance will qualify for a €200 lump sum cost of living payment in January. – DC
Single Person Earning €40,000
Q. My salary is at €40,000 and it seems you don’t really benefit from the budget unless earning over €50,000. Is this the case?
From P
A. For a single person earning €40,000, the tax savings announced in yesterday’s Budget will amount to circa €332. For a more accurate calculation of the tax savings accruing based on your individual circumstances, please see: https://www.pwc.ie/issues/budget/income-tax-calculator.html. – MH
Mortgage Relief for Rental Properties
Q. Does the mortgage interest relief apply to letted out properties?
From Glenn
A. No, only on mortgages taken on your principal private residence – Ie your family home. – DC
Apartment Owners and Tax Relief
Q. I bought an apartment in summer 2023. I now rent the spare room in my apartment to someone. Am I entitled to any relief or tax back?
From George
A. As long as you receive no more than €14,000 a year from the person renting the spare room, you are entitled to Rent a Room relief. This means that you will not have to pay any tax on the rent you receive, which is significant relief.
However, bear in mind that if your tenant pays €14,001, the entire sum will be liable to income tax, PRSI and USC in the same way as any other rental income.
The €14,000 covers not only actual rent but any other money you receive from this person for, say, meals, cleaning or laundry must be included.
That aside, the relief does not apply to short-term rentals – the term must be 28 days at least – and renting to a partner or your child is also excluded. – DC
Redundancies and Social Welfare Payment
Q. Has the social welfare payment for people that are being made redundant been introduced?
From Andrea
A. Not yet, according to Minister for Social Protection Heather Humphreys, a new Pay Related Jobseeker’s Benefit scheme will be introduced in the fourth quarter of 2024. This new scheme will link a person’s jobseeker’s payment to their previous earnings and work history, softening the income shock that a worker may face if they suddenly lose their job. – MH
State Pension Increase
Q. When will the weekly rise in the State pension take effect?
From Damian
A. The €12 increase in the maximum weekly rate payable to state pension recipients will take effect in January. – DC
Mortgage Interest Relief and Trackers
Q. My husband and I have an outstanding mortgage greater than €500,000 and have borne a massive brunt of interest rate hikes due to the enormous level outstanding on our mortgage so it seems unbelievable that we cannot now avail of some form of interest rate relief.
My question therefore is, are we excluded from the interest tax relief because we have an outstanding mortgage greater than €500,000? My husband works in the public sector and we are a one-income family. It appears we are being penalised yet again for holding a large tracker mortgage.
Will the Government look at extending this relief to all tracker rate mortgage holders and if not, why not?
From Lorraine
A. Unfortunately, the relief as drafted will only apply to homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on December 31st, 2022. – MH
Capital Acquisitions Tax Thresholds
Q. Have the Capital Acquisitions Tax (CAT) thresholds changed in Budget 2024?
From James
A. There were no changes to the tax-free thresholds for gift and inheritance tax purposes despite calls to increase them in line with inflation. – MH
Once-Off Welfare Payments
Q. Will Invalidity Pension recipients receive a once-off €400 payment?
From Grace
A. A once-off payment of €400 will be made to people receiving Invalidity Pension, Disability Allowance or Blind Pension. This payment will be made in November 2023. – MH
Incapacitated Child Tax Credit
Q. For those of us who are all ready in receipt of the Incapacitated Child Tax Credit, how is the extra €200 be implemented?
From Ciara
A. The increased tax credit announced in Budget 2024 will be claimed in the same way that you are claiming the current credit.
If you are a PAYE taxpayer, you can claim the credit online through Revenue’s MyAccount service.
If you are self-employed and pay tax under the self-assessment system, the credit is claimed by completing the ‘Incapacitated Child’ section on your annual tax return online at the Revenue Online Service. You can also claim the Incapacitated Child Tax Credit by completing Form ICC1. – MH
Companies and Landlord Relief
Q. Will the tax relief for landlords apply only to natural persons or will it also apply to companies which lease property?
From Rob
A. The new Rented Residential Relief is an income tax relief which provides relief at the standard rate of income tax on a portion of an individual landlord’s residential rental income. – MH
Postgraduate Students
Q. Could you outline the specific measures that will be implemented regarding postgraduates? I am a mature student in my final year of my master’s degree and am receiving Susi fee contribution. Thank you.
From Sinead
A. The two specific measures I can see in relation to postgraduate students are some help with fees and grants.
Minister Simon Harris has confirmed that there will be an increase to the postgraduate fee contribution grant from €4,000 to €5,000 which applies to the current year.
He also flagged the full restoration of student maintenance grants for post graduate students from September 2024 but you will benefit from a pro-rata increase that kicks in from January next. – DC
Croí Cónaithe (Cities) Scheme
Q. There was an announcement in the budget that there will be additional funding available to the scheme to refurbish vacant and derelict properties. Is there any further information on what this means? Is the grant amount set to be increased?
From Lisa
A. The announcement yesterday from what I can see relates to the funding of the scheme and not to changes in the level of grants.
As announced yesterday, €50 million is being provided for the Croí Cónaithe Fund, an increase of 66 per cent from 2023, including the Croí Cónaithe (Cities) element, which supports the building of apartments for sale to owner-occupiers by activating planning permissions already in place for such homes, and the Croí Cónaithe (Towns) element, which supports the refurbishment of vacant properties in cities, towns and rural areas. – DC
Fuel and Living Alone Allowance Lump sums
Q. What date is the fuel lump sum and the Living Alone Allowance being paid? Thanks.
From Gerard
A. A €300 cost of living lump sum Fuel Allowance payment for those getting the Fuel Allowance to be paid in November 2023. A €200 lump sum payment will be paid to those in receipt of the Living Alone Allowance should also be paid this year. – MH
Couple Earning €50,000
Q. How will the budget affect a couple earning €50,000 each year?
From James
A. Clearly, it depends on your personal circumstances – such as any benefit-in-kind you may each receive at work.
But in fairly blunt terms, using your headline wage figure and assuming a 7.5 per cent contribution by you to a workplace pension, the Budget 2024 tax calculator developed by PwC says you will be €1,560 better off next year as a couple, with take home income of €75,416 compared to €73,856 this year and a total tax liability of €20,834 in 2024 compared to €22,394 this year. – DC
Interest Relief and Fixed Mortgages
Q. Does the mortgage interest relief apply if my fixed rate mortgage was up in 2023 and my interest went up but I opted for another fixed term instead of a variable rate?
From Caitie
A. Despite expectations ahead of the budget, the mortgage interest relief measure is not restricted to variable rate mortgages.
For practical reasons, it will not apply to most fixed rate home loans as there will be no change in interest paid this year compared to last year but where there is – such as in your case because you fixed this year on a higher interest rate after your previous fix expired – you will be eligible to apply as long as you meet the other criterium.
This limits relief to mortgages with outstanding balances of between €80,000 and €500,000 at the end of last year. – DC
Renter’s Credit and Student Accommodation
Q. I am paying for my son’s accommodation in UCD on-campus accommodation. Can I claim the renter’s credit for this?
From John
A. Yes you can, and you have been able to since the credit was introduced last year, presuming it is registered with the Residential Tenancies Board, which would be standard practice for any of the third-level institutions providing on campus accommodation. You are entitled to claim a €500 credit against your tax bill in respect of last year and this year, with the figure rising to €750 next year. – DC
PhD Stipend
Q. Is there any sign that the PhD stipends will be raised in the budget?
From Albert
A. There appears to have been no mention of PhD stipends in either of the budget speeches despite the high profile lobbying campaign over recent weeks and months. However, it is not unusual for some measures to materialise in the Finance Bill that have not been flagged in those speeches. That Bill is due to be published next week. It is an issue that could also crop up when the Department for Further and Higher Education holds its post-budget briefing tomorrow. – DC
Landlord Tax Relief
Q. In relation to the tax relief for small landlords, if the rental property is jointly owned and rental income split equally between a couple, will the €3,000 relief at 20 per cent for 2024 apply twice or once per couple?
From Adrian
A. In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled. In the case of an equal split, the credit would be divided equally between you. – MH
Motors
Q. I have access to an electric car with a OMV of €80,000, what will that cost a month now?
From Anonymous
A. In relation to the benefit in kind (BIK) regime for company cars, the Minister announced an extension of the temporary universal relief of €10,000 to the Original Market Value announced earlier this year. Tapering of the preferential BIK relief on electric vehicles is also being suspended and the existing €35,000 Original Market Value (OMV) reduction for 2024 and 2025 is being maintained. Taken together this will mean that an employee like you with an electric company vehicle will see an overall BIK OMV relief of €45,000 in 2024. The remaining €35,000 of value to reach €80,000 is not relieved. The benefit will be calculated based on a reduced OMV of €35,000 and will be taxed through payroll at your marginal rate. – MH
Mortgage drawdowns and Interest Relief
Q. I’m approved for a mortgage, not yet drawn down. Will I qualify for new relief when I draw down?
From Brendan
A. No, Brendan. You need to have been paying mortgage interest last year in order to qualify and if you have not yet drawn down your mortgage then clearly that is not the case for you. – DC
Retirement Relief
Q. How does the Retirement Relief work now? Is the €10 million figure a cap on what was once an unlimited value or is it increasing the €3 million for those over 66?
From Patrick
A. There will be a new limit of €10 million on the relief available for disposals to a child which was previously unlimited. This change will take effect from January 1st, 2025.
The age limit before which relief is restricted to €3 million will move to 70. The introduction of a €10 million limit is very unwelcome and could mean that viable businesses are not transferred between generations and sustained into the future. – MH
Self-employment
Q. Is there any thing in the budget for the self-employed? I am a carpenter operating a small business.
From Tom
A. The earned income tax credit will increase from €1,775 to €1,875 from January 1st, 2024, which should benefit self-employed people.
Other measures relating to increases in the standard rate band, personal tax credits and USC apply regardless of whether you are employed or self employed.
There had been calls to remove the USC surcharge of 3 per cent, which applies only to non-PAYE income but, unfortunately, those calls were ignored. – MH
Applying for the Rent Tax Credit
Q. When will we be able to apply for the rent tax credit? Thanks.
From Mabel
A. You can already apply for the rent tax credit and have been able to do so since the start of this year.
To do so, you will need to file a tax return. This is done after the end of a tax year so you can claim a credit of €500 for the 2022 year, whenever you get around to filing a return with the Revenue.
For most PAYE earners, this will be a Form 12 and it can be done online through your Revenue MyAccount account, although it is also still possible to download a form and fill it out physically.
If you are a self-assessed taxpayer, it will be Form 11. You can claim another €500 for this year when you file a return. The figure now rises to €750 for the 2024 tax year. – DC
Correction: Fostering Allowance
We’re revisiting the changes in relation to foster care and foster children as I made a bit of a howler earlier.
There were a number of measures announced in relation to fostering in a budget that spent a lot of time stressing its focus on children. First up, an extra a double payment of the weekly fostering care allowance of €325 per child under the age of 12 and €352 for older children will be paid this winter. I believe it will be paid in December.
More importantly, Minister Donohoe announced an increase in the statutory foster care rate “by the end of 2024″. The rate will rise by €75 per week for children under 12 and €73 per week for children over 12. That will bring the weekly rates to €400 for a younger child and €425 for an older child in what is the first increase in this allowance since 2009. Finally, Minister McGrath announced his intention to amend the rules on inheritance and gifts.
I got this wrong earlier so sorry for anyone whom I misled. In line with a recommendation of the Commission on Taxation and Welfare, foster children will in future be able to benefit from the Group B threshold (tax free up to a lifetime threshold of €32,500 for people seen as close relations) on anything they receive from the wider family of a foster parent in the same way that a “biological” or adopted child of those foster parents can.
Previously, they were limited to the lower Group C (€16,250 lifetime tax free limit for people considered strangers) applying now. It’s not clear yet quite when that measure will be active in law. They are entitled to the Group A threshold (up to €335,000 tax free lifetime limit) on gifts and inheritances from their foster parents. – DC
EU State Aid Changes
Q. Will GBER (General Block Exemption Regulation) changes only come into affect in 2024?
From Rachel
A. Certain reliefs (EII, Sure and SCI) have been identified as falling within the scope of EU GBER.
However, the Budget 2024 information released yesterday did not specify what amendments to the EII, SURE and SCI reliefs will be made on account of GBER. We will need to hold out for that detail in next week’s Finance Bill. – MH
Illness Benefit
Q. What will people on Illness Benefit get in the budget?
From John
A. Social welfare rates including Illness Benefit are being raised by €12 a week in Budget 2024. The change will take effect from January 1st, 2024. – MH
Child Allowance
Q. My son turned 18 in August. His Children’s Allowance was stopped from then.
Are we eligible to get this reinstated until his 19th birthday? He is in full time education, his costs are going up not down.
From Carmel
A. There’s a lot of interest in the extension of Child benefit to cover children who are 18 and in full-time education. And you can see why.
The sudden disappearance of the €140 a month payment does knock a hole in family budgets, especially, as you point out, when the cost of providing for them is rising, not falling.
The bad news is that while the Minister made the expected announcement, it does not come into effect until September next year by which time any child, like yours, who is currently 18 years old will have turned 19. So, no, you will not be eligible to have your son’s Child Benefit reinstated. – DC
Rent Tax Credit
Q. The increased rent allowance is €750. It also says it will “be backdated to allow for claims to be made for the 2022 and 2023 tax years”. Does that mean I can go back and get €250 from those two years? If so is that automated. Thanks!
From Kris
A. The Rent Tax Credit for people paying for private rented accommodation will be increased from €500 to €750 a year from 2024.
The Rent Tax Credit will be extended to parents who pay for rented accommodation for their student children under the Rent-a-room scheme and for ‘digs’. It is this change only that will be backdated to include the 2022 and 2023 tax years. – MH
New Mortgages and Interest Relief
Q. Will people with new mortgages starting in 2023 be eligible for mortgage interest relief? The Minister phrased it as relief on the increase since 2022 but how does that work if your mortgage payments were zero?
From Oisín
A. As announced, the relief will apply to homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on December 31st, 2022. If you had no outstanding mortgage on December 31st, 2022, you will not be eligible unfortunately. – MH
Standard Rate Cut-Off for Couples
Q. What will be the income tax cut off point for a married couple to pay 40 per cent? Wife earns €39,000 and husband earns €100,000 a year in his business.
From Bernadette
A. With the increases in the standard rate band you can expect the first €84,000 of your joint income to be subject to income tax at 20 per cent with the balance being taxed at the higher rate of 40 per cent. – MH
Claiming Energy Credits
Q. How do you claim energy credits?
From Simon
A. The energy credits will be automatically applied against your bill in three tranches – each worth €150 – over the first four months of next year. You do not need to apply for them. – DC
Pensioners and Energy Bills
Q. What are OAPs going be getting in the budget to help with the energy bills?
From Helena
A. All domestic electricity customers will get €450 off their electricity bills.
The energy credit will be paid in 3 instalments of €150. The first payment will be made in December 2023, the second will be made in January 2024 and the third will be made in March 2024. The reduced 9 per cent VAT rate for gas and electricity will also be extended for 12 months to October 31st, 2024. In addition, a €300 once-off lump sum will be paid to people getting Fuel Allowance in November 2023. – MH
Claiming Mortgage Interest Relief
Q. Exactly how do I avail of this mortgage interest relief in practical terms?
From Declan
A. To claim the mortgage interest tax relief, the taxpayer must file a tax return with Revenue. The relief will operate by way of a credit offset against the taxpayer’s income tax liability in 2023. It is anticipated that the relief may be claimed in early 2024.
Further details will be set out in the Finance Bill due to be published next week. – MH
Rented Residential Relief
Q. Both my husband and I are PAYE workers. We have two rental properties, one in my husband’s name and the other in mine. We are jointly assessed for tax.
Question is in relation to the landlord relief. Will we be entitled to the tax relief individually for each property or once only against the combined income form both properties together?
From Teresa
A. It should be possible for each of you to claim the new Rented Residential Relief on a portion of your individual residential rental income, notwithstanding that you are jointly assessed.
The relief will apply only to tenancies registered with the Residential Tenancies Board, or where a landlord lets a residential property to a public authority (including a Local Authority). You mention that you each own your own property which makes the claim relatively straightforward. In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled. – MH
Unemployment Benefits
Q. What are the specific measures, or plans, in Budget 2024 for pay related unemployment benefit? Thanks!
From Brian
A. There was a lot of talk about pay-related unemployment benefit ahead of the budget but no specific plans were announced yesterday.
Minister Donohoe said the Minister for Social Protection, Heather Humphreys, will bring forward proposals on a new pay-related benefit in advance of the Social Welfare Bill which is due in the coming weeks. – DC
Tracker Mortgages and Interest Relief
Q. We were on a tracker mortgage and when the rates started to increase in July 2022, we decided to fix the mortgage in late 2022. Are we entitled to claim the mortgage interest relief? We are paying a higher rate now than when we were on a tracker rate.
From Jane
A. Mortgage interest tax relief is only available in respect of the increased interest paid on a loan between the calendar year 2022 compared to the calendar year 2023. If your mortgage interest is higher when that comparison is made, you may be eligible for relief. – MH
Childcare Investment
Q. What kind of investment and changes are happening for those in early childhood other than fee cuts?
From Emma
A. In addition to the changes to the National Childcare Scheme, a double payment of Child Benefit to support all families is to be paid in December 2023. There are also a range of social welfare benefit increases and personal tax cuts that may apply depending on your personal circumstances. – MH
Landlord Relief for Married Couples
Q. Can a husband and wife who jointly own a rented apartment (but file taxes separately) both claim the €600 landlord relief? Like four single tenants can each claim a €750 credit?
From Chris
A. Nice idea, but no. Or at least, not on the basis of what we know so far.
According to information provided by the Department of Finance on the tax changes announced in the budget, where there are joint owners of a property, the relief allocation will depend on how the rental income is split. That indicates that the maximum relief next year will be €600 but that, for tax purposes, it would be divided between you.
Of course, that seems to create some confusion because the income disregard at the standard 20 per cent rate relates to rental income overall and not rental income per property. It may be that given both owner spouses’ relief as a result of the division of the benefit on this property is below the €600 and either party owns other properties, they might be able to “top up” their relief to the €600 max next year (rising to €800 in 2025 and to €1,000 in 2026 and 2027) on the basis of that other rental income. Of course, you will both need to be registered as owners with the Residential Tenancies Board for this to be a live issue.
It is clear that there will need to be some clarification of how this is going to work over the coming days, up to and including publication of the Finance Bill, the legislation that implements the measures announced in the budget. So it is worth keeping an eye out for that. – DC
Core Welfare Payments
Q. When will the core payments increase take place – from what date or month? Is it immediately?
From Mary.
A. The across the board increases in social welfare weekly payments of €12 will apply from January 2024. – MH
Share-based Remuneration
Q. I receive shares/Restricted Stock Units from my job as part of my compensation package. I know there has been discussion around personal tax report (or something similar) by the department in his budget last year. Was anything changed this year as a result of that or will Revenue continue to take 50 per cent plus of them as they vest?
From Patrick
A. The only announcements in respect of share-based remuneration is yesterday’s budget related to state aid approval of changes previously announced to the Key Employee Engagement Programme (Keep). However, the Minister did announce that he will be launching a public consultation on share-based remuneration, recognising the increased importance placed on it by employers in rewarding and retaining employees and the continued globalisation of the workforce. – MH
Pension Funds and Tax Relief
Q. Is there any change in the maximum pension fund amount?
From Michael
A. There was no mention of any amendment to the maximum permitted size of a pensions fund for tax relief purposes. – DC
Mortgage Interest Relief Threshold
Q. Our fixed mortgage is now about to end and go up substantially in November. We fall within the threshold stated in the budget. How does the new mortgage relief work and what can we expect to receive? Thanks.
From Alex
A. The relief introduced is a temporary one-year mortgage interest tax relief scheme for homeowners. Relief will apply to homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on December 31st, 2022.
Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax (20 per cent). The relief will operate by way of a credit offset against the taxpayer’s income tax liability for 2023 and may be claimed in early 2024. – MH
Climate Action Funding
Q. I can see climate action touched on in some of the budget items but it feels like there hasn’t been much provision made to contribute to meeting our climate targets. Could you outline what exactly has been allowed for?
From Sarah
A. A €14 billion Infrastructure, Climate and Nature Fund was introduced, which the Government says will grow incrementally by €2 billion each year for seven consecutive years. The climate and nature component of the fund will be worth over €3 billion and will be used support the achievement of our carbon budgets through capital projects.
Accelerated capital allowances for energy efficient equipment are extended by a further two years to December 31st, 2025. There was also an increase in the exemption from income tax, PRSI and USC – from €200 a year to €400 – for profits and gains earned by qualifying individuals related to the domestic generation of electricity supplied to the grid.
The Ministers also confirmed an annual increase in carbon tax (as per Finance Act 2020) from €48.50 to €56 per tonne of CO2. The increased rates apply to auto-fuels such as petrol and auto diesel from October 11th, 2023 and to other fuels from May 1st, 2024. The Vehicle Registration Tax relief for battery electric vehicles up to a value of €50,000 has also been extended until the end of 2025. VAT on the supply and installation of solar panels for private dwellings has been reduced to zero from May 1st, 2023 is being extended to schools with effect from January 1st, 2024.
Some other climate-related funding measures announced in Budget 2024 include: an allocation of €90 million to retrofit social housing; €380 million to residential and community energy schemes (including a record allocation to the Warmer Homes Scheme); €113 million to fund the incentivisation of farming in a greener and more sustainable way; €20 million to fund electric vehicle charging infrastructure and urban cycling; and €5 million to fund the restoration and conservation of peatlands.
There will also be a new low interest loan scheme that will work alongside the Sustainable Energy Authority of Ireland grants to allow everyone the opportunity to benefit from energy saving. – MH
Childcare Subsidies
Q. How is the National Childcare Scheme (NCS) changing and when will it change?
From Mary
A. The changes will take effect from September 2024. At that point, all families accessing registered early learning and childcare will receive a minimum hourly universal NCS subsidy of €2.14 off their out-of-pocket costs, rising from a current hourly rate of €1.40.
For families on the minimum or universal subsidy, this will mean up to €5,007 off their annual bill per child. This represents up to an additional €1,731 off the annual cost of early learning and childcare per child. Families on the maximum subsidies under the NCS, based on an income assessment and the age of the child, can already receive up to €11,934 off their annual fee. – MH
Claiming Mortgage Interest Relief
Q. Will my repayments automatically be reduced at source or will it be a lump sum from Revenue?
From Charlie
A. If eligible, you will need to claim the relief by filing a tax return at the end of 2023 – once you know the full mortgage interest bill for this year. There will be no adjustment at source to your monthly payments as a result of this measure. – DC
Income Tax Exemption for Over 65s
Q. The income tax exemption for over 65s has been €18,000 for a while now. Has there been any change in this?
From Michael
A. The income tax exemption for over 65s remains at €18,000.
However, regardless of age, there is another way to look at income tax, which means that from January 1st, 2024, most people can earn up to €18,750 without paying any.
If you are getting a pension, employment income or getting a taxable social welfare payment, you are also entitled to the Employee Tax Credit which has increased from €1,775 to €1,875 in this year’s budget. You are also entitled to an annual personal tax credit of €1,875 (which also increased from €1,775 in this year’s budget).
Taking both credits together, when the total amount of tax you owe is calculated, €3,750 will be deducted from this. This means that if you earn €18,750 or less, you do not pay any income tax because your tax credits of €3,750 are more than or equal to the amount of tax you are due to pay. However you may need to pay a Universal Social Charge if your income is over €13,000, and PRSI depending on how much you earn each week and your age.
You are not liable for PRSI contributions after the age of 66. – MH
Employment Investment Incentive Scheme
Q. My business is looking to raise funds through Employment Investment Incentive (EII) scheme. What changes are coming down the track?
From Aoife
A. The EII scheme provides SMEs and start-ups with a way of raising funds that is tax efficient for the investor.
In yesterday’s budget, the minister announced that he will be enhancing the scheme by standardising the investment period to four years for all investments, and doubling the amount an investor can claim relief on for four year investments to €500,000.
As against these positive announcements, we have the state aid rules, the principal change that we expect to see under EU state aid relief relates to the rate of tax relief granted to investors. Currently, relief is granted at the marginal rate (40 per cent) but once the changes proposed are implemented the rate of tax relief will vary depending on a number of factors including: whether the company previously completed an EII fundraising; or whether the money is invested directly or indirectly via a qualifying fund.
So, for example, tax relief of only 20 per cent will be available on subsequent EII fundraising when the money is invested directly into the company. The concern for companies is that this will make the task of attracting fresh capital more challenging. – MH
Mortgage Switchers and Interest Relief
Q. Exactly who will get mortgage interest relief? Will those who fixed their mortgage at the beginning of increases qualify?
From Carol
A. Those on mortgages which were fixed on or before December 31st, 2022 will not benefit from the relief. The relief will only apply to homeowners who had an outstanding mortgage balance of between €80,000 and €500,000 on their primary home on 31 December 2022 and who have experienced an increased interest cost on their mortgage in 2023 when compared with the amount they paid in 2022 – namely tracker mortgage holders and those on variable rates. – MH
Invalidity Pension Lump Sum
Q. Will Invalidity Pension recipients get a lump-sum payment like Disability Allowance recipients?
From Francesca
A. Yes, the €400 cost of living lump sum payment will be made to people receiving the Invalidity Pension in January, alongside other welfare recipients. If you receive more than one welfare payment, you will only be eligible for one cost of living lump sum payment. – DC
Income Tax Changes Start-Date
Q. Do the income tax changes in the budget take affect in 2023 or the start of January, 2024?
From Brian
A. The income tax changes signalled in yesterday’s Budget will take effect from January 1st, 2024. – MH
Irish Language Funding
Q. What are the provisions for increased/decreased Irish language spending in this budget?
From Seán
A. The budget was light on detail when it comes to the Irish language, with Minister Donohoe noting that the increased allocation to the Department of Tourism, Culture, Arts, Gaeltacht, Sports and Media would “support Irish as a living language, both in the Gaeltacht and the wider community”.
The associated expenditure report is equally vague, referring to “additional funding for Irish language supports schemes”. The budget for the Gaeltacht will increase by just over €4 million to €100,098,000 from €995,893,000 this year. – MH
Retirement Relief and Family Businesses
Q. Can you explain the changes to Retirement relief and how they will impact family businesses?
From Deirdre
A. Retirement relief is an important relief that allows individuals transfer businesses in a tax efficient manner. In particular, private businesses owners had called for the removal of an arbitrary age limit which restricts relief available for those over 65.
In practice, this restriction has meant that individuals over 65 hold on to equity until their death, which stifles investment in businesses and, in turn, stifles job growth from those enterprises. In terms of changes, on the positive side, from January 1st, 2025, the age limit of 65 I mentioned will be increased to 70.
However, in an unexpected and backwards move, from January 1st, 2025, there will be a new limit of €10 million on the relief available for disposals to a child until the age of 70. This further complicates and disincentivises the transition of viable businesses and is very unwelcome. – MH
Married Couples
Q. How much better off will a married couple be with one person working?
From Adrian
A. The amount by which you will be better off will depend on your level of income. A married couple with one earner making €50,000 a year will be €867 better off in 2024 as a result of changes announced on Tuesday.
For a more accurate calculation of the tax savings accruing based on your individual circumstances, please see: https://www.pwc.ie/issues/budget/income-tax-calculator.html. – MH
Renters and Mortgage Interest Relief
Q. I had a mortgage of €139,000 all during 2022. Unfortunately, I couldn’t keep it up, so I had to sell the property in March 2023.
I am now renting again. Can I claim Mortgage interest relief for 2022, and if so, how?
From Kieran
A. The relief is only available to those who are paying mortgage interest this year.
Any amount you get would be calculated by taking your total mortgage interest bill for 2023 and seeing how much higher it is than the interest you paid last year.
As you sold the property in March, there is no way your interest bill will be higher than last year when you were paying the mortgage for the full 12 months. As a result, you will not qualify for any relief from the measure announced in the budget. – DC
Child Benefit
Q. When will the extension of children’s allowance to 18-year-olds in full-time education begin?
From Sinead
A. Child Benefit is to be extended to 18-year-olds in full-time education from September 2024. – MH
Fuel Allowance
Q. When is the Fuel Allowance lump sum to be paid?
From Muriel
A. The €300 Fuel Allowance lump sum is to be paid in November to those eligible to receive it. – MH
Parent’s Benefit
Q. Hello. I have a child born in April 2023 and I am on maternity leave now.
I was planning to apply for the seven-week Parent’s Benefit in April 2024. With that being extended to nine weeks from August 2024, does it mean I can take further two weeks from August 2024 until the child is two years of age? Or does the whole nine-week period benefit have to start from August 2024? Thank you.
From E
A. Parent’s Benefit is a scheme payable to parents who take parent’s leave from work.
Under current rules, Parent’s Benefit provides seven weeks payment to each parent of a child aged under two years – or in the two years following an adoption – who is on Parent’s Leave from work to care for their child and covered by social insurance (PRSI).
The additional two weeks of Parent’s Leave announced yesterday should apply to children who are under the age of 2 in August 2024, or adoptive children who have been placed with their parents for less than two years in August 2024. Parents can take nine weeks together or take separate weeks of leave under the scheme.
So the answer to your first question is yes, so long as your child is under two, which they are. – MH
Interest Relief and Mover Mortgages
Q. In relation to mortgage interest relief, I moved house in 2023, and took out a new mortgage with a higher interest rate to do so.
Will I be able to claim for the higher interest on my new mortgage in 2023 versus my old mortgage from 2022? Thanks.
From Richard
A. Interesting. It is not a scenario that has been covered in the details issued so far by the Minister and I expect we may need to wait for publication of the Finance Bill next week – or even later as that Bill is amended on its passage through the Oireachtas – for certainty on this issue. In any case, you won’t be claiming until the start of next year, so there is plenty of time to sift through the finer details of the scheme when they are available. – DC
Home retrofitting
Q. Embarking on a deep retrofit of a 60 year old house, with a small extension. What was in the budget relating to this? Thanks.
From Derek
A. Perhaps surprisingly, there was very little mention of retrofitting and energy sustainability measures in the budget, and no change that will affect your deep retrofit.
Minister Donohoe did announce €90 million in spending on retrofitting next year, but that was only in relation to social housing. – DC
Fuel Excise Duty
Q. Have they not delayed or scrapped the increase in fuel duty due on petrol? Is it time to fill up the car?
From Colin
A. The temporary excise rate reductions – which apply to diesel, petrol and marked gas oil, and which were due to expire on October 31st, 2023 – are being extended. The Minister deferred the final tranche of the fuel duty excise increases, which will now take place in two equal instalments. So, 4 cent, 3 cent and 1.7 cent will be added to petrol, diesel and marked gas oil respectively on both April 1st, 2024 and August 1st, 2024. – MH
Landlord Tax Credit
Q. Does the landlord tax credit apply equally to multiple properties if a small landlord owns more than one?
From Barry
A. A temporary tax relief is being introduced to support private landlords if they keep their rental property in the rental market for the next four years. The relief equates to a tax break worth between €600 and €1,000, rising each year for the next four years.
The relief will be clawed back if the landlord leaves the rental market during this time. In his speech, Minister McGrath noted that “a total of 86 per cent of landlords in the market own just one or two properties, which is why the Government is introducing a temporary tax relief, which will primarily benefit small landlords”.
So, the relief is certainly aimed at smaller landlords, but there does not appear to be a restriction on the number of properties held. The relief applies to the landlord’s residential rental income as a whole rather than on a property-by-property basis. – MH
Help to Buy Scheme
Q. Has there been any talk of the Help to Buy scheme being extended to second hand homes?
From Peter
A. The Help to Buy scheme is being extended but it continues to apply only to newly built homes.
Minister McGrath confirmed that the deadline for applications will now be extended to the end of 2025.
A by-now routine review of the scheme will consider whether any other changes should be made next year. He also said that the scheme would be amended so that some people availing of the Local Authority Affordable Purchase Scheme – who have found they do not qualify for Help to Buy under current rules – can access it.
Those new rules come into force on Wednesday (today). – DC
Income Taxes
Q. Please, I am changing job, my income will raise on €48,000 per year, how much will be my tax? I am single person. My children are 17 and 19 years old.
From Maria
A. Based on the information you have outlined, your tax bill should be in the region of €7,660, €830 less than you would have paid if you earned €48,000 in 2023.
For a more accurate calculation of the tax you will pay based on your individual circumstances please see: https://www.pwc.ie/issues/budget/income-tax-calculator.html. – MH
Third-Level Fees
Q. The question marked 7.30am refers to the 2024/25 academic year. Is this correct?
This is the press release from Minister Harris: “The once off cost-of-living measures benefiting students in the 2023/2024 academic year will include: A €1,000 reduction in the student contribution fee for higher education students eligible for the free fees initiative. When taken together with the new €500 student contribution grant the student contribution fee will be halved to €1,500 for eligible families with a household income of between €62,000 and €100,000.″
From Ciaran
A. Typically, reductions apply prospectively.
However, you are correct that the press release from Minister Harris in this instance refers to “once off cost-of-living measures benefiting students in the 23/24 academic year”.
Subject to confirmation, the reductions should apply this year. – MH
Inflation and Budget 2024
Q. Taking inflation and average wage growth over the past year into account, in real terms, how much better or worse off is the average tax payer with Budget 2024?
From John
A. The most recent figures on earnings published by the CSO are for the second quarter of the year. Average weekly earnings at that point were €909.77 (or €47,308 a year) compared to €871.93 (€45,340 a year) a year earlier.
Using those figures and assuming you are a 40-year-old married man paying €4,500 a year into a workplace pension, your take-home pay next year will be 4 per cent ahead of this year.
As of August, inflation was running at 6.3 per cent. Minister McGrath expressed hope that the figure would fall as we go into next year but as it stands, in real terms, you will be slightly worse off than this time last year though not as badly off as you would have been without the Budget 2024 adjustments to tax and USC bands and the USC rate.
So, not an exact science, but that might give you some sense of how your post-budget position compares with the same time last year. – DC
Susi Grant Income Thresholds
Q. Will Susi grant income thresholds change for grants and maintenance grants with increases to social welfare?
My daughter is allowed to earn €6,000 before tax and I am allowed an income of up to €25,000 in order to receive her Susi grant for college and maintenance grant to be able to attend.
If between us we go over €25,000 (her €6,000 isn’t counted) she will not get her maintenance grant and not be able to afford to go to college.
We are just at the limit of this without any increases to social welfare at the moment. If I get an increase in my long term social welfare payments, this would mean she would lose her maintenance grant in order to get to college.
From Catherine
A. In terms of income thresholds, Minister Donohoe said in his speech there would be “improvements to the thresholds for maintenance and student contribution grants, from September 2024″.
However, the expenditure reports – which are published with the budget and outline what departments’ expenditure allocations will allow them to do – says in relation to student supports that next year’s allocation will allow the Department of Further and Higher Education to increase to the income threshold for the Band 4 maintenance grant to €50,840 and for the 100 per cent student contribution grant by 10 per cent to €55,924 from September 2024.
There was no mention of the category relating to your €25,000 income limit. The department will hold a post-budget briefing tomorrow (Thursday) so we may learn more at that time. – DC
Mortgage Interest Relief
Q. I pay [monthly mortgage repayments] of €1,527 per month on a mortgage of €120,000. Am I able to apply for income tax relief?
From Paul
A. The new Mortgage Interest Tax Relief will be introduced for a year (12 months) for homeowners who had an outstanding mortgage balance of between €80,000 and €500,000 on their primary home on December 31st, 2022. So with an outstanding mortgage of €120,000, you may be eligible.
However, the relief only applies to those who have been impacted by successive interest rate hikes and have experienced increased interest on their mortgage in 2023 when compared with the amount they paid in 2022 – namely tracker mortgage holders and those on variable rates. So, if your mortgage has been fixed for some time, you won’t be eligible.
If eligible, the tax relief on the increase in interest cost will be 20 per cent, which is the standard income tax rate. The relief will be capped at €1,250. – MH
Invalidity Pension
Q. Will the core rate increase? I hear of talks of the three-tier system. Will assessments be to take the social welfare payments off people who are on it, or just to allow them to possibly work? How can you work if you were deemed in capable of work previously and how can you guarantee that you can show up for work? Some people have a good day and the rest bad, but even on good days wouldn’t be fit for work.
From Marie
A. There was no mention in the Budget Day speeches of any changes to eligibility for the Invalidity Pension. So, as of now, you do not have to worry about any changes to the regime.
That might come separately down the line but not as a result of this budget.
What was announced was the €12 increases in the maximum weekly rate, which applies across all weekly welfare payments and also a €400 one-off cost of living payment that will be made to you in January. You will also get the Christmas bonus double payment in December. – DC
Susi Maintenance Grant
Q. Will the Susi maintenance grant increase and will they get a double payment like last December again? This was vital for my college-going daughter. Also will half price fares for students continue on buses, as I believe this is to end soon too?
From Marie
A. On the grant side, the ministers announced increases in the student grants from January.
The full effect will only be felt in the academic year starting next September but the payments will be made pro rata from January, so your daughter should see her payment rise for the second half of the academic year.
There was no mention of any double payment for Susi grant holders this year, so I do not expect that is being repeated.
On the transport side, the reduction in bus fares appears to have been extended to the end of 2024, so she should not have to worry about that. – DC
Income Taxes
Q. My partner and I are getting married in June of next year. What will be the effect on both our incomes (PAYE) if we opt to be jointly assessed in 2024?
From Stephen
A. The joint assessment option is usually the most favourable basis of assessment for a married couple or civil partners. Under this option, the tax credits and standard rate cut-off point can be allocated between spouses to suit their own circumstances.
If only one spouse or civil partner has taxable income, all tax credits and the standard rate cut-off point will be given to the spouse or civil partner with the income. If both of you have taxable income, you can decide which of you is to be the assessable spouse or nominated civil partner.
The standard rate cut-off point for married couples/civil partners is €49,000 in 2023 and this will increase to €51,000 in 2024. This amount is taxed at 20 per cent and the balance is taxed at 40 per cent. Where both spouses/civil partners have income, this standard rate cut-off point can be increased by the lower of the following: €33,000 in 2024; or the amount of the income of the spouse/civil partner with the smaller income. – MH
Inheritance Tax Thresholds
Q. Is there anything in the budget about inheritance tax thresholds? Either for a son or daughter or for a niece or nephew. It is a cruel double tax on a family on property that was hard earned in the first place. The thresholds for children are €335,000. And for nephews/nieces, €32,000. With the price of property so high I can’t understand how more people are not shouting about this.
From Mary
A. Unfortunately, there were no changes to the Capital Acquisitions Tax (CAT) thresholds announced in this year’s budget, either for children or other relatives and the thresholds remain at €335,000 and €32,500 respectively.
Given the rate of property price inflation in recent years, more and more people with modest levels of wealth are being pulled into the CAT net. We at PwC had sought increases in the CAT thresholds in our pre-budget submission. However, these changes did not come to pass. – MH
Third-Level Fees
Q. Will there be help towards college registration fees this year?
From Colette
A. Minister Donohoe announced a reduction in the student contribution fee for third-level students in yesterday’s budget.
All students will receive a once-off reduction of at least €1,000 in their fees.
The reduction goes up to €1,500 for students living in households with an income of less than €100,000. This will bring the student contribution fee down to €2,000 or €1,500 for the 2024/25 academic year. – MH
Updated information: Typically, reductions apply prospectively. However, the press release from the Department of Higher Education in this instance refers to “once off cost-of-living measures benefiting students in the 23/24 academic year”. Subject to confirmation, the reductions should apply this year.
Fostering Allowance
Q. Is the fostering allowance going up in the budget?
From Kathleen
A. There were a number of measures announced in relation to fostering in a budget that spent a lot of time stressing its focus on children.
First up, an extra double payment of the weekly fostering care allowance of €325 per child under the age of 12 and €352 for older children will be paid this winter. I believe it will be paid in December.
More importantly, Minister Donohoe announced an increase in the statutory foster care rate “by the end of 2024″. The rate will rise by €75 per week for children under 12 and €73 per week for children over 12. That will bring the weekly rates to €400 for a younger child and €425 for an older child in what is the first increase in this allowance since 2009.
Amended: Minister McGrath also announced his intention to change the rules on inheritance and gifts.
In line with a recommendation of the Commission on Taxation and Welfare, foster children will in future be able to benefit from the Group B threshold (tax free up to a lifetime threshold of €32,500 for people seen as close relations) on anything they receive from the wider family of a foster parent in the same way that a “biological” or adopted child of those foster parents can.
Previously, they were limited to the lower Group C (€16,250 lifetime tax free limit for people considered strangers) applying now.
It’s not clear yet quite when that measure will be active in law. They are entitled to the Group A threshold (up to €335,000 tax free lifetime limit) on gifts and inheritances from their foster parents. – DC
What’s in the budget for someone in their mid-20s?
Q. What will the budget mean for me, a man in his mid twenties who has to live at home with his parents because the Dublin rental sector is too expensive. I am on €35,000 a year and work hard – yet it seems like we are being forgotten about.
From John
A. Based on your circumstances as described, you should end up with an extra €308 in your back pocket as a result of the changes announced on Tuesday.
Many individuals are being priced out of the rental market and although there were a number of housing measures announced, including an increase in the rent tax credit announced in Budget 2023 from €500 to €750, the scale of the housing crisis is such that these measures are unlikely to make a meaningful difference to individuals in your circumstance.
For a more accurate calculation of the tax savings accruing based on your individual circumstances please see: https://www.pwc.ie/issues/budget/income-tax-calculator.html. – MH
Inheritance Taxes
Q. Has there been any change in the Capital Gains Tax or Inheritance Tax exemption limits?
From John
A. As anticipated there were no changes to the headline rate of Capital Gains Tax or Capital Acquisitions Tax and both remain at 33 per cent.
There were also no changes to the tax-free thresholds for gift and inheritance tax purposes despite calls to increase them in line with inflation. – MH
Motors
Q. As a cyclist, will there be any tax breaks for buying new bicycles?
From Francis
A. There was nothing announced in the budget to specifically encourage the purchase of bicycles on environmental or other grounds, such as we got previously with the Cycle to Work scheme back in 2009. – DC
Social Welfare
Q. How will the budget affect my State pension?
From Brendan
A. There were a number of supports announced for pensioners in this year’s budget. There will be a €12 increase in the maximum weekly rate of all state pensions from January 2024 along with a proportionate increase for people getting a reduced rate.
In addition, a €300 cost of living lump sum Fuel Allowance payment will be made in November 2023 for those getting the Fuel Allowance and a €200 cost of living lump sum payment to people who are getting a Living Alone benefit.
A Christmas Bonus is to be paid in December 2023 and there is also a January cost of living bonus for pensioners to be paid in 2024. – MH
Students going to university
Q. What’s in the budget for students going to university?
From Tony
A. There was a reduction in the student contribution fee for third-level students in yesterday’s Budget. All students will receive a once off reduction of at least €1,000 in their fees. The reduction goes up to €1,500 for students living in households with an income of less than €100,000.
This will bring the student contribution fee down to €2,000 or €1,500 for the 2024/25 academic year. In addition, the Rent Tax Credit, which is being increased from €500 to €750 a year from 2024, will be extended to parents who pay for rented accommodation for their student children under the Rent-a-Room scheme and for ‘digs’. – MH
Income Taxes
Q. I have a €165,000 mortgage left. I pay €1,200 month. Will my monthly payments change?
From Jason
A. A fairly tightly tailored mortgage interest tax relief scheme was announced by Michael McGrath in the budget. It will not mean any change to your monthly payments but it may allow you to claim relief at the end of the year. How much you pay monthly is not relevant.
What counts is how much interest you are paying on your mortgage over the course of this year (2023) compared to 2022. So if you were on a fixed rate covering both years, there will have been no change in your interest bill and you will not qualify. If, however, you are on a tracker or other variable rate, or if you were on a fixed rate that expired some time last year or this year, you will be eligible.
The relief is modest, however, as the first four ECB interest rate rises – accounting for a 2.5 percentage point rise – happened in 2022; 2023 has seen rates rise by two percentage points in six separate steps. Those 2022 rises will of course fall into what will be the base year for referencing, limiting the benefit.
To claim the relief, you will have to file a tax return which means, in effect, that you will only see the benefit of the relief early next year. You must also be compliant with the local property tax to qualify. Essentially you will get 20 per cent of whatever the increase is this year over last year, up to a maximum benefit of €1,250.
The relief is available only to those whose outstanding mortgage balance at the end of last year was between €80,000 and €500,000, so you will fall within that. This has been presented as a one-off measure, so what happens your interest bill next year is also irrelevant. The Minister has promised more details in the Finance Bill. – DC
