Mortgage interest tax relief may be extended

FIRST-TIME BUYERS who bought properties in 2003 will get an extension on the payment of mortgage interest tax relief, if a proposed amendment to this year’s Finance Bill is adopted.

Fine Gael deputy leader Richard Bruton told a meeting of the Joint Committee on Finance and the Public Service yesterday that he intended to draft a measure that, if adopted, would give a limited entitlement to tax relief for people who fall just outside the present eligibility criteria.

Under a measure introduced in last December’s budget, people who are in receipt of first-time buyers’ tax relief, or who take out a qualifying loan up to the end of December 2011, will continue to receive that relief up until the end of 2017.

Previously, entitlement to the relief lasted for a period of seven years.

However, people who bought homes in 2003 saw their entitlement to the relief run out on December 31st, 2009, meaning that they do not qualify for the extension. Mr Bruton said that many of these buyers were in negative equity, most of them were not “high rollers” and that it would be fairer to introduce transitional arrangements.

Minister for Finance Brian Lenihan has indicated that transitional arrangements will be applied to qualifying loans taken out during 2012.

The relief will be provided at reduced rates for shorter periods in these instances.

At the meeting to discuss the Finance Bill, Mr Lenihan rejected an amendment by Labour Party deputy leader Joan Burton to introduce a taxpayers’ advocate, who would have responsibility for overseeing the rights of taxpayers.

Ms Burton said a number of people who had lost their jobs as a result of recession – in particular, former construction sector workers – were required to furnish welfare offices with tax clearance certificates, but delays in obtaining these meant they had to wait several months before receiving welfare entitlements.

Ms Burton suggested that the role of a taxpayers’ advocate could be added to the office of the Ombudsman. “There is a need for it more than ever,” she said.

However, Mr Lenihan said he was not convinced of the need for such a facility, citing statistics indicating that the Revenue processes all online claims within five working days and 75 per cent of all other claims within 10 working days.

“There is a wide range of checks and balances already in place,” the Minister added.

There was a heated debate between Ms Burton and Mr Lenihan in relation to tax relief on investment in the construction of private hospitals. Ms Burton said that private hospitals yet to be completed but “in the pipeline” under the Government’s co-location policy were “dead ducks” as a result of the change in the economic climate and asked Mr Lenihan for an estimate on the cost of tax foregone.

However, Mr Lenihan said the tax break, which has ended for new investors in private hospitals but still applies to existing investments, had to be phased out rather than completely abolished.

“There is no fresh legislative measure that can be introduced here,” he said.

Mr Bruton said cost-benefit analyses should be undertaken on a range of tax breaks as part of a “never again” policy.

Mr Lenihan said Government departments would report back to him by the end of June with estimates on the costs and benefits of various tax measures, but that some of the data was not available.

Mr Lenihan agreed with Mr Bruton that a discussion paper in relation to proposals for a single social insurance payment, first flagged in the Budget, would be “useful”.