Mortgage Interest Tax Credit (MITC)

The new tax credit is a one-year tax credit for the 2023 tax year only and is based on the increase in interest paid in 2023 over interest paid in 2022. The relief is aimed at offsetting some of the impact of 10 successive interest rate increases from the European Central Bank (ECB), which has made many homeowners dig deeper into their pockets to service their loans.

Even though several conditions need to be satisfied to avail of the relief, it is estimated that approximately 208,000 homeowners are eligible to benefit from the tax credit and have extra money back in their pockets. Homeowners who have fixed-rate mortgages or mortgages with balances of less than €80,000 as of 31 December 2022 will, however, not benefit from the relief.

Do I qualify for MITC?

If you did take a qualifying loan, which means a loan from a qualifying lender (lender listed by the Central Bank of Ireland) which was used solely for the purchase, repair or development of a residential property that is used as your sole or primary residence, then you will be entitled to claim the MITC for the 2023 tax year where all these conditions were satisfied:

• You paid interest on a qualifying loan in the years 2022 and 2023.
• The interest on the qualifying loan increased from 2022 to 2023.
• The outstanding mortgage balance on 31 December 2022 was between €80,000 and €500,000.
• The property (situated in Ireland) was your principal private residence (primary home), your former or separated spouse’s primary residence or your dependant relative’s primary residence.
• Local Property Tax (LPT) obligations in respect of that property are satisfied.
• The property must be compliant with planning permission provisions.
• The property must not have been acquired from a connected party where the purchase price substantially exceeds the market value. 

How much can I claim with MITC?

The credit is available for the 2023 tax year only and is based on the increase in interest paid in 2023 over interest paid in 2022. The increase will, subject to a cap of €6,250, qualify for relief at the standard rate of Income Tax (20%), meaning the maximum value of the MITC is €1,250 per qualifying property.

For example, if you have a qualifying loan with a mortgage balance of €200,000 on 31 December 2022 and you paid €12,000 in interest on the qualifying loan in 2023 and €9,000 in interest on the qualifying loan in 2022, then you qualify for MITC as calculated below provided all the other above conditions are satisfied.

The relief will be calculated on a pro-rata basis if the interest paid in either or both years was for less than 12 months or where there are multiple claimants in respect of the same property.

How can I claim the Mortgage Interest Tax Credit (MITC)?

One must file an income tax return for the 2023 tax year in order to claim MITC, regardless of any other obligation to file a return. Revenue requires you to submit the following supporting documents:

• Certificate of Mortgage Interest 2022.
• Certificate of Mortgage Interest 2023.
• Confirmation of mortgage balance at 31 December 2022.
• The LPT Property ID.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars private client team below:

March 2024