The Irish Revenue Commissioners have confirmed that people who bought their homes since 2002 will have their mortgage interest relief cut off from Friday, until they can show they are entitled to it. First Time Buyers will continue to get relief.

The Minister for Finance had said when presenting the recent emergency Budget that homeowners would continue to be able to claim relief for the first seven years of their mortgage. Until now, people received mortgage interest relief over the full lifetime of a mortgage on their main home.

An estimated 230,000 home owners face higher mortgage bills, at least temporarily.

The group includes those who have moved at least once. They include 118,000 people who have switched mortgage provider in recent years in search of better terms as well as those who have received top-up mortgages.

The Revenue plan to issue letters in the next fortnight, asking for details of mortgages and evidence that the money has been used for ther main home rather than for other purposes, such as education fees, a new car or to pay off other debts.

The letters will seek details of when the homeloan was taken out, the loan account number, details of any switch of mortgage provider or any mortgage top-up and the percentage of the loan that was used to “purchase, repair, develop or improve” their main home.

Mortgage-holders who satisfy the Revenue Commissioners that their mortgage relates solely to the purchase of their main residence will have their relief reinstated and backdated.

The Revenue said the "Minister for Finance in his supplementary Budget of 7 April announced  that mortgage holders will, from 1 May 2009, only receive mortgage interest  relief through the tax relief at source system for the first seven years of  the mortgage.

For those affected by the Budget change, the maximum relief involved in the case of a married couple is €75 a month, or €37.50 for a single person  and in many cases it would less than these amounts."

The Revenue said it has been working with lenders in giving effect to those changes  since the announcement.

First Time Buyers who are within the first seven years of their mortgage  will continue to get the relief automatically until the end of the 7th year of their mortgage.

Non-First Time Buyers are only entitled to the relief after 1 May where they are in the first seven years of the mortgage on a qualifying loan. Revenue has been working with the lenders to identify those accounts where  there will be an entitlement to mortgage relief under the new rule. Until that entitlement can be established mortgage interest relief is not being  paid from 1 May.

The Revenue said where, based on the information provided by lenders, an entitlement to  relief is established, tax relief at source will be reactivated automatically by Revenue in June. Any arrears of relief will be credited to  their accounts without the need for any action on the part of the account  holder. Where an entitlement to relief cannot be established then Revenue  will be writing to those mortgage holders in the coming weeks. Where such  account holders provide information to Revenue that establishes their  entitlement to mortgage relief, tax relief at source will then be  reactivated by Revenue. Again any arrears of relief will be credited to the  account.

The Revenue said it understands from its discussion with the lenders over the last few  weeks that the arrangements should not have an adverse impact on  the operation of the accounts of mortgage holders. However the precise  arrangements in any case is a matter between the individual account holder  and his/her lender.

Fine Gael finance spokesman Richard Bruton said on Wednesday: “Yet again, it’s hard-pressed taxpayers who will have to pay for Brian Lenihan’s mistake,” he said.“It was well known that it was going to be much harder to implement changes to income tax midway through the year. Clearly the Minister failed to anticipate any problems and failed to put in place an implementation strategy.”

The mortgage relief is worth up to €900 a year for a working couple who jointly hold the mortgage to their home. First-time buyers can receive relief of up to €5,000 per year for a working couple in the first two years of their mortgage, falling to €4,500 for each of the next three years and then €4,000. The figures are halved for individual buyers.

First Time Buyers, whose relief was increased in last October’s budget will not be affected by the move – as long as they have bought their home within the last seven years.

The Revenue says it has already determined that mortgages on 57,000 properties around the State will definitely no longer be entitled to the relief from Friday May 1st.