Finance (No.2) Act 2023
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Mortgage interest tax relief | ||
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13. The Principal Act is amended— | ||
(a) in section 458, in Part 2 of the Table, by the insertion of “Section 473C” after “Section 473B”, and | ||
(b) by the insertion of the following section after section 473B: | ||
“Mortgage interest tax relief | ||
473C. (1) In this section— | ||
‘appropriate percentage’, in relation to a year of assessment, means a percentage equal to the standard rate of tax for that year; | ||
‘claimant’ has the meaning given to it by subsection (2); | ||
‘credit information provider’ has the meaning given to it by section 2 of the Credit Reporting Act 2013 ; | ||
‘dependent relative’, in relation to an individual, means any of the persons mentioned in paragraph (a) or (b) of subsection (2), or in paragraph (a) or (b) of subsection (2A), of section 466 in respect of whom the individual is entitled to a tax credit under that section; | ||
‘loan’ means any loan or advance or any other arrangement whatever by virtue of which interest is paid or payable; | ||
‘local property tax number’ means the unique identification number assigned to a residential property by the Revenue Commissioners under section 27 of the Finance (Local Property Tax) Act 2012 ; | ||
‘mortgage interest tax credit’ has the meaning given to it by subsection (2); | ||
‘personal representative’ has the same meaning as in section 799; | ||
‘PPS Number’, in relation to an individual, means the individual’s Personal Public Service Number within the meaning of section 262 of the Social Welfare Consolidation Act 2005 ; | ||
‘qualifying interest’ in relation to an individual, means the total amount of interest falling due in a year of assessment, and paid in that year of assessment, where such interest has been paid in respect of a qualifying loan; | ||
‘qualifying lender’ means a credit information provider; | ||
‘qualifying loan’, in relation to an individual and a qualifying property, means a loan or loans from a qualifying lender which, without being used for any other purpose, is or are used by the individual solely for the purpose of defraying money employed in the purchase, repair, development or improvement of the qualifying property or in paying off another loan or loans used for such purpose, and is or are secured by the mortgage of freehold or leasehold estate or interest in that qualifying property, and the amount of the aggregate of the balance remaining unpaid on the loan or loans in respect of that qualifying property on 31 December 2022 is— | ||
(a) not less than €80,000, and | ||
(b) not more than €500,000; | ||
‘qualifying period’ means the period commencing on 1 January 2023 and ending on 31 December 2023; | ||
‘qualifying property’, in relation to an individual, means a residential property which is used as the sole or main residence of— | ||
(a) the individual, | ||
(b) a former or separated spouse of the individual, or a former civil partner or a civil partner from whom the individual is living separately in circumstances where reconciliation is unlikely, or | ||
(c) a person who, in relation to the individual, is a dependent relative, and which is, where the residential property is provided by the individual, provided rent-free and without any other consideration; | ||
‘relievable interest’ has the meaning given to it by subsection (4); | ||
‘residential property’ means— | ||
(a) a building or part of a building located in the State which is used or suitable for use as a dwelling, and | ||
(b) adjoining land which the occupier of the building or part of the building, referred to in paragraph (a), has for his or her own occupation and enjoyment with that building or part of that building as its gardens or grounds of an ornamental nature; | ||
‘separated’ means separated under an order of a court of competent jurisdiction or by deed of separation or in such circumstances that the separation is likely to be permanent; | ||
‘specified amount’, in relation to a year of assessment, means the lesser of— | ||
(a) an amount equal to the relievable interest, and | ||
(b) (i) the upper limit, or | ||
(ii) where subsection (9) applies, the amount determined in accordance with paragraph (b) of that subsection; | ||
‘upper limit’ means €6,250 or, where subsection (5) applies, the amount determined in accordance with paragraph (a)(i), (a)(ii) or (b), as the case may be, of that subsection. | ||
(2) An individual (referred to in this section as the ‘claimant’) who proves that during the qualifying period he or she paid qualifying interest and makes a claim in that regard shall be entitled to a tax credit (to be known as the ‘mortgage interest tax credit’) equal to the lesser of— | ||
(a) an amount equal to the appropriate percentage of the specified amount, and | ||
(b) the amount which reduces the claimant’s income tax to nil. | ||
(3) Where a claimant is assessed to tax in accordance with section 1017 or 1031C in a year of assessment, any qualifying interest paid by the claimant’s spouse or civil partner in that year of assessment shall, for the purposes of this section, be deemed to have been paid by the claimant. | ||
(4) (a) For the purposes of this section, relievable interest, in relation to an individual, shall be an amount determined by the formula— | ||
A-B | ||
where— | ||
A is the amount of qualifying interest for the year of assessment 2023, and | ||
B is the amount of qualifying interest for the year of assessment 2022. | ||
(b) Where qualifying interest paid for a year of assessment referred to in paragraph (a) is for a period where the number of days in the years of assessment to which ‘A’ and ‘B’ in the formula in paragraph (a) relate are not the same, the amount of qualifying interest represented by ‘A’ or ‘B’, as the case may be, in the formula in paragraph (a) shall— | ||
(i) where the number of days in the year of assessment to which ‘A’ relates is greater than the number of days in the year of assessment to which ‘B’ relates, be determined by the following formula— | ||
A x D/E | ||
and | ||
(ii) where the number of days in the year of assessment to which ‘B’ relates is greater than the number of days in the year of assessment to which ‘A’ relates, be determined by the following formula— | ||
B x D/E | ||
where— | ||
D is the number of days in the year of assessment with the lesser number of days, and | ||
E is the number of days in the year of assessment with the greatest number of days. | ||
(5) Where, for a year of assessment, qualifying interest referred to in subsection (4) is for a period of less than 365 days, then— | ||
(a) where— | ||
(i) the number of days in the year of assessment to which ‘A’ in the formula in subsection (4) relates is less than 365 and the number of days in the year of assessment to which ‘B’ in the formula in subsection (4) relates is equal to 365, or | ||
(ii) the number of days in the year of assessment to which ‘B’ in the formula in subsection (4) relates is less than 365 and the number of days in the year of assessment to which ‘A’ in the formula in subsection (4) relates is equal to 365, | ||
the upper limit shall be determined by the formula— | ||
F x G/H | ||
or | ||
(b) where the number of days in the year of assessment to which ‘A’ in the formula in subsection (4) relates is less than 365 and the number of days in the year of assessment to which ‘B’ in the formula in subsection (4) relates is less than 365, then, the upper limit shall be determined by the formula— | ||
F x I/J | ||
where— F is €6,250, | ||
G is the number of days in the year of assessment with the lesser number of days, | ||
H is the number of days in the year of assessment with the greater number of days, | ||
I is the number of days in the year of assessment with the lesser number of days, and | ||
J is 365 days. | ||
(6) Where qualifying interest is paid in respect of a period which falls partly in one year of assessment and partly in another year of assessment, the amount of qualifying interest paid in respect of that period shall be apportioned to each year of assessment based on the proportion each part of the period bears to the period as a whole. | ||
(7) Where, in the case of an individual within the meaning of paragraph (a) of the definition of ‘qualifying property’ in subsection (1)— | ||
(a) the individual dies during the qualifying period, and the residential property is used as the sole or main residence of the deceased individual’s widow or widower or surviving civil partner, or of any dependent relative of the deceased, the property shall be treated as a qualifying property for the purposes of this section and interest paid on a qualifying loan by a personal representative of that individual shall, upon making a claim in that regard, be treated as qualifying interest, or | ||
(b) the individual, or where subsection (3) applies, the individual or his or her spouse or civil partner, resides in another residential property to facilitate his or her attendance at or participation in his or her trade, profession, employment or office holding, that other residential property may be treated as a qualifying property for the purposes of this section. | ||
(8) A residential property shall not be regarded as a qualifying property for the purpose of this section where— | ||
(a) a charge to Local Property Tax under section 16 of the Finance (Local Property Tax) Act 2012 applies to the residential property concerned for the calendar year 2023 and the requirements of Part 7 of that Act are not complied with, | ||
(b) the provisions of any permission required under the Planning and Development Acts 2000 to 2022 and granted on or before 31 December 2022 in respect of the residential property are not complied with or such permission has ceased to exist, or | ||
(c) any interest in a residential property was acquired from an individual who is connected, within the meaning of section 10, with the individual acquiring such interest and it appears that the purchase price of the residential property substantially exceeds the value of what is acquired. | ||
(9) Notwithstanding subsection (2), where two or more individuals are or would but for this subsection be entitled under this section to relief in respect of the same qualifying property, the following provisions shall apply: | ||
(a) only one mortgage interest tax credit under this section shall be allowed in respect of the qualifying property; | ||
(b) the upper limit shall be apportioned in respect of each of the individuals concerned in accordance with the formula— | ||
K x L/M | ||
where— | ||
K is the upper limit, | ||
L is the relievable interest in respect of the individual, and | ||
M is the relievable interest as determined by the formula in subsection (4) in respect of all of the individuals concerned in respect of the same qualifying property. | ||
(10) Notwithstanding the provisions of this section, where, in respect of a qualifying property and a year of assessment— | ||
(a) an individual is entitled, in respect of a residential property, to an allowance to which subsection (1), (1A) or (1B) of section 836 applies, or | ||
(b) an individual is allowed, in accordance with section 836(2), a deduction under section 114 in respect of expenses in maintaining a residential property, this section shall not apply to qualifying interest paid in that year in respect of that residential property. | ||
(11) In making a claim under this section, a claimant shall provide to the Revenue Commissioners, through such electronic means as the Revenue Commissioners make available, the following information— | ||
(a) the claimant’s name, address (including the Eircode) and PPS Number, | ||
(b) the address (including the Eircode and local property tax number) of the qualifying property in respect of which a claim under this section is made, | ||
(c) in the case of a qualifying property referred to in paragraph (b) or (c), as the case may be, of the definition of ‘qualifying property’ in subsection (1), the name, address (including the Eircode) and PPS Number of the person referred to in the said paragraph (b) or (c) who is using the property as his or her sole or main residence, | ||
(d) where subsection (3) applies— | ||
(i) the name, address (including the Eircode) and PPS Number of the claimant’s spouse or civil partner, | ||
(ii) the address (including the Eircode and local property tax number) of the qualifying property in respect of which a claim under this section is made, | ||
(e) full particulars of the qualifying loan or loans under which qualifying interest was paid, including but not limited to— | ||
(i) the qualifying interest paid by the claimant for the years of assessment 2022 and 2023, | ||
(ii) where subsection subsection (9)(b) applies, the total qualifying interest paid by all of the individuals concerned for the years of assessment 2022 and 2023, and | ||
(iii) the amount of the aggregate of the balance remaining unpaid on the loan or loans as provided for in the definition of ‘qualifying loan’ in subsection (1), | ||
and | ||
(f) any other information that may reasonably be required by the Revenue Commissioners to determine whether the requirements of this section are met. | ||
(12) A qualifying lender shall, on being so required by an officer of the Revenue Commissioners, furnish or make available to the officer, within the period of 30 days of being requested to do so by the Revenue Commissioners, particulars referred to in subsection (11)(f). | ||
(13) Failure to furnish any of the particulars referred to in subsection (11) shall be grounds for refusal of a claim and, where relief has already been given to a claimant under this section, such relief may be withdrawn by the Revenue Commissioners.”. |