Changes to mortgage interest relief will simplify the existing system and benefit home buyers on their second and subsequent mortgages. The position of first-time buyers remains unchanged. Budget 2000 proposes to allow those who are not first-time buyers to claim 100 per cent relief up to an interest ceiling of £2,000 (€2,541) for single home-owners and £4,000 for married couples.
At present, people other than first-time buyers can only claim relief on 80 per cent of the interest and this is subject to a further deduction of £100 for single and widowed persons and £200 for married couples.
Thus, the maximum interest on which a single person, who is not a first-time buyer, can claim tax relief at present is £1,900 a year, while the maximum for a married couple is £3,800. But from April 6th, 2001, they can claim up to £2,000 and £4,000 respectively.
First-time mortgage holders will continue to be able to claim 100 per cent relief on interest up to the current ceiling of £2,500 for single people and £5,000 for married couples in the first five years of their mortgage.
Widowed persons who are first-time buyers will be allowed claim up to £5,000 in relief a year, up from £3,600, while the ceiling is set at £4,000 in other cases, up from £2,780.
The Minister also proposed that medical insurance relief and mortgage interest relief should no longer appear on the taxpayer's tax-free allowances form. Instead, they should be deducted at source and netted off against the premium or interest paid by the taxpayer. Mr McCreevy has asked the Revenue Commissioners to make the necessary arrangements with mortgage lenders and health insurers for this new system to be introduced in the next tax year.
The Budget also increases rent reliefs for tenants. The allowance available to those aged under 55 will be increased by 50 per cent from April 6th, 2000. It will rise from £500 to £750 for a single person, from £750 to £1,125 for widowed persons and from £1,000 to £1,500 for married couples.
For those aged 55 years and over, Mr McCreevy plans to standard rate the relief currently available at the taxpayers' marginal rate of tax.
But to ensure that those claiming the relief - some 20 per cent of the total - at the higher rate of tax do not lose out, the Minister doubled rental relief to £2,000 for a single person, £3,000 for the widowed and £4,000 for married couples a year.