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IMPORTANT UPDATE ON TAX RELIEF AT SOURCE (TRS)

What is happening?
From 1st May the Revenue are making changes to the Tax Relief at Source (TRS) system.  As a result of changes announced in the Government's April 2009 Emergency Budget, borrowers who qualify for TRS will now be entitled to receive relief for the first seven years of their mortgage only, .

First-time buyers, who have not moved house/remortgaged/re-financed, will continue to receive tax relief at source in the usual way.

All borrowers currently receiving TRS are having their relief suspended immediately, pending a review of their entitlements by the Revenue under the amended TRS scheme.

Mortgage lenders are acting on the instructions of the Revenue in this regard.

Why is this happening?
The Revenue want to ensure that customers get relief only for the period they are entitled to receive it.

For example, a borrower (including first-time buyers) who switch/change their mortgage lender three years into their mortgage will not be classified initially as a qualifying borrower.  However, under the amended TRS scheme they will be entitled to a further 4 years relief under the seven year rule.

These changes will ensure that customers, as in the example above, are accurately assessed for the remaining relief owed and are not awarded an additional seven years tax relief when switching.

Will customers who still qualify for TRS get reinstated?
Yes.  The Revenue have committed to a full review of these accounts across all institutions and will reinstate TRS for customers who continue to qualify under the new rules.

How long will this review take?
An exact timeline has not been provided at this stage, however the Revenue aspire to have the review completed during the month of May 09 and to begin reinstatement of payment/credit for TRS from June 09 onwards.

This timeframe is purely indicative at this stage and given the number of accounts involved across all institutions this review may take longer to complete.  

Will qualifying customers get back the TRS they miss while the review is ongoing?
Yes.  The Revenue have agreed to reimburse customers for any relief entitlements not paid/credited during the review.

It is important to note that under the new TRS rules included in the recent budget, borrowers may now attract a lower level of relief than previously enjoyed and may not get back as much as they anticipate or as much as previously received.

Are the Revenue telling customers what is going on?
No plans are currently in place for communication by the Revenue to the general public.

This will cause a great deal of confusion for borrowers who will be unsure as to why their relief has been suspended.

THIS IS A TEMPORARY MEASURE
HOWEVER, AFFECTED BORROWERS CAN EXPECT HIGHER DIRECT DEBITS TO THEIR ACCOUNTS FOR THEIR MONTHLY MORTGAGE PAYMENT, DUE TO THE ABSENCE OF TAX RELIEF BEING CREDITED TO THEIR MORTGAGE ACCOUNTS.  

If you have specific questions in relation to tax relief at source you can call the Revenue TRS helpline on 1890 463626.

Examples of qualifying criteria can be found at www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html.

As always if you have any queries on this communication please contact John, Shirley or Sharon @ Lidierth Financial

29th April 2009

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WARNING: YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP PAYMENTS ON A MORTGAGE OR ANY LOANS SECURED ON IT.