Homebuyer's tax relief

When you buy a home with the aid of a mortgage or other loan you were entitled to tax relief on the interest provided the place is your main home.

This tax relief, which was scrapped after 5 April 2000, was normally given through the MIRAS system. This meant the lender charged the borrower interest net of allowable tax relief on the first £30,000 of the mortgage and then claimed the relief back from the Inland Revenue .

Tax relief was given at 10% (1999-2000 tax year). Effectively, this meant that if the mortgage rate you were being charged was 7%, you'd actually be paying interest at a rate of 6.3% on the first £30,000.

Where a borrower was not in the MIRAS system, relief wac obtained by adjustment to PAYE tax coding or by way of a reduced tax bill for the self employed .See Also: Mortgage Centre and Mortgage comparison Service for the latest facts and figures.

Last Updated: April 2008 © Moneyextra.com

MoneyExtra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.