Fewer than one in seven homeowners who are eligible for the Mortgage Interest Tax Credit applied last year for the tax benefit worth up to €1,250, new figures from Revenue have shown.
The tax authorities say that more than €100 million in tax relief under the scheme remains unclaimed.
The Mortgage Interest Tax Credit was introduced by then minister for finance Michael McGrath as part of his budget package in October 2023. It was described at the time as a temporary once-off measure targeted at homeowners who had been hit with a 10 interest rate hikes from the European Central Bank (ECB) between July 2022 and September 2023 that pushed interest rates from zero to 4.5 per cent.
The multiple rate increases had left many homeowners paying more than €4,000 a year more in loan repayments by the end of the year 2023 when compared with 2022.
At the time, the minister suggested the relief would benefit as many as 208,000 people – with tracker mortgage holders, those on standard variable rates and people whose loans had been taken over by so-called vulture funds along with anyone coming off a fixed rate being the beneficiaries
According to Revenue’s most recent update, a total of 29,254 homeowners applied for the mortgage interest relief over the course of last year. That means just over 14 per cent of mortgage holders who were expected to benefit from the tax credit have applied so far.
And new claims for the tax credit have slowed in the second half of the year. Just under 23,000 people have applied for the credit last June, rising to 26,859 at the end of October.
While a person qualifying for the maximum rebate stood to get a tax refund of €1,250, figures from Revenue suggest the average return to date among those who have applied was €670.
On the basis of that average figure, just under €120 million remains unclaimed by mortgage holders.
The credit is available to taxpayers where the outstanding mortgage balance on their family home was between €80,000 and €500,000 on December 31st, 2022 and their interest bill was higher in 2023. It is paid at a rate of 20 per cent of the increase in the homeowner’s interest bill in 2023 over 2022, up to a maximum of €1,250.
Mortgages on investment properties and holiday homes do not qualify.
While originally billed as a one-off cost-of-living measure, it has since been extended to include to 2024 – again measuring last year’s mortgage interest bill against the 2022 figure – in last October’s budget.
For the 88 per cent of homeowners who stand to benefit from the tax relief but have yet to apply, there is still time to make a claim for 2023. Revenue limits claims for tax refunds for both PAYE and self-assessed people to four years after the year in question.
So homeowners will have till the end of 2027 to claim their credit. However, credits not claimed in a timely fashion tend to go unclaimed over the longer term.
The mortgage interest relief is not the only tax credit that people are leaving behind. While about 400,000 renters are understood to be eligible for the rent tax credit, currently worth up to €1,000 per person, just under 290,000 claimed it last year, according to Revenue.
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