Mortgage Tax Break for the Family Home

The government is proposing to grant mortgage tax relief on the main home, but the amount of the payout has been tightly drawn.

Thus, the amount of relief will be limited to 20% of the interest incurred on the loan, capped at a maximum sum per household, and for a limited duration.

Under the proposals a couple would be entitled to a maximum of €1500 per year, with an additional allowance of €100 a year for each child.

The entitlement for a single person is limited to €750 a year.

The relief would be available for a maximum of five years, for the first five years of the loan. Accordingly, existing mortgagees would be entitled to the tax relief, provided they had held the mortgage less than five years.

The effect of these conditions is to grant maximum tax relief for a couple with no children of €7500 over five years.

If the household does not pay income tax (as is the case with around 50% of the population) then they would be granted a tax credit, in an equivalent sum to that they would otherwise have received in tax relief. In other words, the taxman would send you a cheque!

It is clear these measures fall short of the hopes of many households, although the fact that it includes those with an existing mortgages has surprised a number of commentators.

The main aim of the change seems to be to contribute towards the electoral promise of the new president to create ‘a country of homeowners’.

Accordingly, the measure is aimed mainly at those trying to get on the housing market for the first time, but with one eye to its impact on public finances.

Nevertheless, estate agents have welcomed the move, which they hope will reignite a flagging housing market. Prices have been dropping in most areas of France, with a large number of properties on the market, and low levels of demand.