Wednesday, March 13, 2013

Who benefits from Mortgage Interest Relief?

The Statistical Report of the Revenue Commissioners has a chapter on Income Distribution Statistics.  Within that Table IDS15 gives some details on the relief given for interest paid on home loans – Mortgage Interest Relief (MIR).  Here are the totals from that table.

Mortgage Interest Relief Distribution

The total amount of MIR allowed in 2010 was just under €280 million, with an average relief of €850 given to the 328,000 or so recipients.  The amount has fallen in recent years and was as high as €700 million in 2008 when the ECB rate peaked at 4.25%.  It has since fallen to 0.75%.

The final column shows that the amount of relief granted generally increases with income and the highest average going to those with an income over €275,000.  Although there are limits to the amount of relief that can be claimed, it is clearly a function of the size of the loan.   Those on higher incomes, on average, have bigger loans.

Around €20.5 million of relief is granted to Income Tax cases with an income over €100,000, though issues of jointly-assessed Income Tax returns, separately-assessed married couples and the tax case to which the relief deter definitive judgements.

It can be noted that at €279 million the amount of relief granted is less than the amount expected to the collected by the Local Property Tax this year (€250 million), and that even next year, when the full rate applies, the average MIR of €850 will be in excess of the property tax bill that these mortgaged home-owners will face.  MIR is due to be phased out by 2017.

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