Only one in 10 eligible homeowners claim refund under mortgage tax relief scheme
Lack of awareness cited as key reason for the low uptake
Questions have been raised about the Government’s mortgage interest relief scheme after it emerged that only small numbers of people have claimed the tax refund.
Just over one in 10 of those eligible have received a refund of tax, Finance Minister Michael McGrath admitted in a Dáil reply to Labour’s finance spokesman Ged Nash.
Mortgage holders hit by huge increases in interest rates last year are able to claim up to €1,250 in a tax credit that can be paid into their bank accounts.
People on tracker rates, those on variables and people unable to fix because their mortgage was sold to a vulture fund were told they would benefit from the temporary tax credit.
When he announced the scheme during last year’s Budget, Mr McGrath estimated that up to 208,000 mortgage accounts would be eligible. The projected cost was put at €125m on a once-off basis.
But figures obtained by Mr Nash show that up to June 13 only 22,559 PAYE taxpayer units made a claim for the credit.
He was told that just 20,248 claimants received a refund of tax from the Revenue Commissioners, totalling just over €19m.
This means there is an average refund of €940 per mortgage account.
Revenue informed the minister that 271 claimants did not benefit from the credit as they did not pay any income tax last year.
Others had underpaid tax, so the refund due was netted off the tax they owed.
Information is not yet available for self-assessed taxpayers as these taxpayers have until October 31 to submit their 2023 income tax return, Mr McGrath said in the reply.
It is thought that the low level of take-up of the scheme is down to a lack of awareness and a reluctance to engage with Revenue, especially as PAYE workers claiming it have to submit a tax return.
Mr Nash said the low level of claims raised questions about the design of the scheme.
“The Government has questions to answer over the design and handling of this scheme based on the low levels of uptake, and I am very curious indeed about what is driving the low levels of demand.”
He said that halfway through the year just under 23,000 people out of what the Government had said were an estimated 208,000 eligible mortgage holders had made a claim for the relief.
“The payout to date totals less than €20m. This is a low figure when set against the projected cost of €125m to the Exchequer when the scheme was launched. This demands an explanation,” Mr Nash said.
The relief applies to those with a mortgage of between €80,000 and €500,000 at the end of last year. It covers changes to mortgage repayments over the course of last year, up to a maximum of €1,250.
Sinn Féin finance spokesman Pearse Doherty had said the fact that the scheme excluded those with balances on their mortgage below €80,000 would mean around 137,000 mortgage holders would miss out.
But Mr Nash said the Dáil reply he has obtained meant that both “Sinn Féin and Fianna Fáil both got their numbers wrong”.
“It also seems that demand for this untargeted relief is nowhere near as strong as some parties stridently made out last year.”
Mr Nash said he was sceptical about the scheme as a public policy initiative, but it had been legislated for and it was there to be accessed by eligible homeowners. Anyone who was eligible therefore should be encouraged to apply, he said.
PAYE workers can get the credit through Revenue’s MyAccount service. But they must file a 2023 tax return to do so.
Claimants needed to upload their certificate of mortgage interest for 2022 and 2023 and provide a confirmation of their mortgage balance on December 31, 2022, said Marian Ryan, consumer tax manager with Taxback.com.
The easiest way for PAYE taxpayers to claim the relief would be to log on to the Revenue website, said the Department of Finance. The scheme will operate for one year and is based only on the increased amount of interest paid last year compared with the previous year. It applies only to residential properties.