Over 225,500 home owners will see a jump in their mortgages from today if they had been qualifying for tax relief at source.
The mortgage interest relief was due to be abolished entirely in 2017 but was extended until the end of 2020.
The average relief per year on a €250,000 mortgage for a couple is around €1,857, according to CEO of the Irish Mortgage Holders Organisation, David Hall.
This means that some people could see their mortgage payments jump by €150 per month or more.
The Department of Finance confirmed to the Irish Mirror that based on current data the number of mortgage accounts that will no longer be in receipt of the relief from today is 225,532.
But it was always being phased out.
The lender gave the tax relief by either reducing the monthly mortgage payment or as a credit back into a mortgage funding account.
A spokesman for the Department said: “The relief has expired for mortgages taken out prior to 2004 and ceased for new borrowings from January 2013.
“The residual Mortgage Interest Relief is therefore only available on qualifying mortgage loans taken out between 2004 and 2012 and has been phased out for the remaining recipients on a tapered basis to alleviate the potential financial difficulties of the ‘cliff’ that may arise if the relief was removed in a single year.
“In 2019, 50% of the interest on a relevant loan qualified for relief while for 2020 the amount was tapered to 25% and will cease from 1 January in 2021, as legislated for in Finance Act 2017.”
Mr Hall said he hoped this was an oversight by the Department given thousands of people had lost their jobs during the pandemic and are uncertain about their future.
And said there should have been a reminder to people availing of it.
He said the decision should be reversed and was a nail in the coffin to already vulnerable families.
He said: “It’s a nail in the coffin to those at the end of a horrible year to be grappling with their own health in a pandemic, with an uncertain future and now to cap all that off they’re now faced with an additional increase and charge on their mortgage.
“And this in circumstances where you don’t have a job and not sure about the future will only put you into mortgage arrears faster and gives you a higher amount to repay.”
The Finance department said The decision to abolish Mortgage Interest Relief was prompted by the view that relief effectively becomes priced-in to the purchase price of the property.
Sign up for our newsletter today!
Simply pop your e-mail into the box at the top of this article (this won’t work while using the Irish Mirror app) and get all the latest news and entertainment direct to you
Every day we’ll send you a roundup e-mail of all the latest news. Local Irish news, UK and international news, local and national Sport and entertainment news , all in one handy e-mail.
You can unsubscribe from this service at any time. And rest assured that your data will not be shared with any other party.
The spokesman added: “Research by the ESRI contends that demand-side oriented tax incentives that target home buyers, such as Mortgage Interest Relief, are likely to result in increased house prices with a limited increase in supply and thus the home purchaser is unlikely to end up as a net beneficiary.
“Revenue has advised that the cost of relief in 2019 was approximately €60 million. The projected cost for 2020 is in the order of €35 million.”