Thousands of taxpayers across the country miss out on their tax entitlements every year, due to a lack of awareness of the various tax reliefs and credits, or a reluctance to engage with Revenue.
Others find it too complicated to claim their tax entitlements through Revenue's online services.
For example, it's estimated that 400,000 renters are eligible to apply for the Rent Tax Credit and yet only 73,000 claimed it last year.
A similar credit, this time for mortgage holders, was introduced in Budget 2024.
The mortgage interest tax credit will put some much-needed money back into the pockets of those who are eligible for it - if they go to the effort of claiming it.
"As we move further into 2024, it will be interesting to see the official figures on the number of homeowners that avail of this credit," said Marian Ryan, Consumer Tax Manager with Taxback.
Mortgage Interest Tax Credit
The credit is a targeted measure which will save more than 150,000 home owners up to €1,250 a year. It will cost the exchequer €125 million.
The relief is aimed at offsetting some of the impact of interest rate increases imposed by the European Central Bank which has seen the monthly cost of some mortgages climb sharply.
It is limited in scope, however. The relief is available to tracker mortgage holders and those on variable rates. Home owners who have fixed-rate mortgages or mortgages less than €80,000 will not benefit.
The credit is only available to those who have seen their mortgage interest bill for 2023 increase on 2022.
"So, those who had the foresight and ability to move to cheaper mortgage rates in 2023 will likely lose out because their mortgage interest bill will likely be lower for 2023 rather than higher," Ms Ryan said.
"In addition, the relief will only be available to taxpayers – and so those who fall outside the income tax net, such as the many retired individuals on modest tax-exempt incomes, won't benefit even if they are still repaying their mortgage and have seen a substantial increase in their mortgage interest bill."
Unlike the previous mortgage interest relief scheme, which was granted at source by the various lenders, in order to claim the new relief, taxpayers must file a tax return with Revenue and be compliant with Local Property Tax requirements.
The relief is granted at a rate of 20% so homeowners who qualify for it will still have to meet at least 80% of the increased interest repayment.
Ms Ryan from Taxback said there would certainly be merit in changing the way this relief is to be granted so that banks would grant it at source, which they did when the previous scheme was in place, " so the expertise and knowledge is already there".
She said there would also be merit in extending this relief beyond a year as the impact of high interest rates will be felt for some time to come.
Is it complicated to claim the Mortgage Interest Tax Credit?
No borrower would turn down extra money to ease the burden of paying their mortgage every month.
It's easy to apply when you know how, but there are many people - particularly PAYE workers who have never had a reason to file a tax return before who may be daunted at the prospect of filing a return and could lose out on the mortgage interest relief they are entitled to as a result.
Taxpayers can apply for their mortgage interest tax credit directly with Revenue through their online account. If it's their first time filing a return, they will need to set up MyAccount.
"At Taxback, our advice to any individual who is feeling unsure of how to claim their mortgage interest tax credit would be to contact a tax advisor who can support you with your application."
What do you need in order to apply for the relief?
Taxback's Marian Ryan said there are a number of conditions relating to both the mortgage and the property that must be met in order to be eligible for the Mortgage Interest Tax Credit.
Firstly, your mortgage must be with a qualifying lender and, on December 31, 2022, your outstanding mortgage balance must have been between €80,000 and €500,000.
You must have paid interest on the loan in both 2022 and 2023.
The interest on the loan must have increased from 2022 to 2023.
The property must be located in Ireland and comply with Local Property Tax and planning permission requirements, if applicable.
It must either be your main residence, or a residential property you, your spouse or civil partner use so you can attend work.
You may also be able to claim the credit if you are paying the mortgage interest on a qualifying loan for the main private residence of:
Your former or separated spouse or civil partner
A dependent relative who does not pay you rent
A dependent relative who is your, or your spouse or civil partner’s:
Widowed mother, widowed father or parent who is a surviving civil partner
Relative who is unable to look after themselves due to old age or illness
In order to apply for this tax credit on your 2023 tax return you will need to have:
Your certificate of mortgage interest for 2022.
Your certificate of mortgage interest for 2023.
And confirmation of your mortgage balance on December 31, 2022.
