Mortgage Interest Relief is a tax relief based on the amount of interest that you pay in a tax year on a qualifying mortgage loan.
Mortgage interest relief is being extended for remaining recipients (owner occupiers who took out qualifying mortgages between 2004 and 2012) on a tapered basis.
The relief will cease entirely from 2021.
How do I claim Mortgage Interest Relief?
You can claim Mortgage Interest Relief on interest paid by you on a loan used to purchase, repair, develop or improve the home. This relief can be claimed up to 31 December 2020.
Mortgage interest relief is administered via Tax Relief at Source (TRS). This means that your mortgage lender gives you the benefit of tax relief on the amount of mortgage interest paid. The lender does this by reducing your mortgage repayment by the amount of tax relief you are entitled to in each tax year. Any amendments to this tax relief i.e. if there is a change in interest rates are made automatically by your lender.
You do not have to be earning a taxable income to qualify for mortgage interest relief.
What happens if I am in arrears?
For borrowers who do not make their repayments or who pay less than the amount of interest charged to their account, the TRS amount is reduced to reflect the actual amount of interest paid.
For expert advice on accounting, auditing and taxation services please contact us at McEvoy Craig