Tax relief is available for mortgage interest paid, subject to certain limits. For the tax year ending 31 December 2008, the maximum available relief for a single person who is not a first time buyer is €3000 and for a married or widowed person, €6000. Where it is their first purchase, these figures are increased to €10,000 for a single person and €20,000 for married couples or a widower. These increased limits apply for the first seven years, thereafter the amounts fall back to €3000 and €6000 respectively.

The relief given is always at the standard rate, which is 20% for the tax year 2007. Where the interest actually paid in a tax year is below the limits quoted above, the relief is restricted to the actual interest paid.

From 1 January 2002, mortgage interest relief is granted at source. This means that the relief will now be granted by the bank / lending institute involved and will no longer be included in your tax free allowance certificate or your annual income tax return. Thus, an individual's monthly mortgage payments should be reduced by the tax relief available. However, the onus is on the taxpayer to contact their bank / lending institute to ensure that they have all relevant particulars of the borrower so as to enable them to reduce their mortgage by the relevant sum.

For the tax year to 31 December 2008, a married couple who are first time buyers will get mortgage interest relief equating to a maximum tax saving of €333.33 (€166.66 for a single person) per month, assuming the annual interest paid by the couple exceeds €20000.

Investors - Interest Relief:

In respect to investors, interest relief on monies borrowed to purchase or improve residential properties is allowable from 1 January 2002. Interest Relief is allowable against renal income for the same period.

The "Rent A Room Scheme" was introduced by the Finance Act 2001. Its main aim was to increase the availability of rented residential accommodation and permitted a person to let a room (or rooms) in their principal private residence, with gross annual rental income of up to €10000 being exempt from tax.

Room rentals coming within the scope of this scheme will not trigger a clawback of any stamp duty relief, nor will it affect full entitlement to Capital Gains Tax principle private residence relief (in the event of a subsequent disposal of the property) nor full entitlement to mortgage interest relief.