From 1 January 2014 TRS is being calculated based on the interest which has been paid on a Mortgage Account two months previously. In order to continue to qualify for full TRS, the required interest payments will need to be made from November 2013 onwards.
If you pay your full mortgage repayment on time each month you are unaffected by the move to calculating TRS based on interest paid.
If you do not pay your required monthly interest charge then you are impacted by the changes and you are unlikely to receive full TRS.
Irish tax legislation, as introduced in 2002, sets out that TRS should be calculated based on interest which has been paid by a customer (subject to Revenue ceiling and qualifying interest). Accepted industry practice, however has been to calculate TRS based on interest charged to a customer each month.
From 1 January 2014, in order to comply with 2002 Irish tax legislation, Revenue instructed Financial Institutions to calculate TRS based on interest paid by a customer rather than on interest which has been charged to a customer.
Permanent TSB bases your TRS allowance on the amount of interest which has been paid two months previously (e.g. in determining the TRS allowance for January 2014, permanent tsb based the TRS calculation on the amount of interest paid in November 2013). This is to allow for any unpaid or re-presented direct debits. However, at the end of the year the actual interest paid for that calendar year (i.e. from January to December) was calculated and if there is any additional TRS to be granted, this amount was lodged to the mortgage account as outlined below. If you have received too much TRS this may be re-couped by Revenue directly. This is in line with current Revenue practice. Any queries in relation to this should be directed to www.revenue.ie or phone 1890 463626.
Each tax year (i.e. January - December) will be treated independently.
From 1 Jan 2014, the TRS calculation is based on interest paid two months previously in order to determine the actual amount of interest paid. This is to allow for any unpaid or re-presented direct debits.
At the end of each year the actual interest paid for that year from January to December is calculated and if any additional TRS is to be granted, this amount is applied in the following manner:
Where additional TRS is due to a customer, this amount will appear on your annual mortgage statement issued in January each year. (For One Plan mortgage accounts this appears on your monthly statement).
If you pay off your loan, the actual interest paid for that calendar year will be calculated from January of that year to the first day of the month in which your loan is paid off. If any additional TRS is to be granted this will be lodged to the mortgage account before we close the loan and a refund will issue where appropriate.
If you have received too much TRS, this may be re-couped by Revenue directly. See above for more info.
You can set up an overpayment arrangement on your account, however should you wish to use the overpayments made to fund future monthly mortgage repayments, this may result in a reduction of TRS.
It is important to note that using any overpayments made in previous years to fund underpayments in a different tax year may result in a reduction of TRS. This is because the end of year look-back calculation only applies to interest which has been paid in the 12 month calendar year (i.e. January - December). See below for more detail.
Any pre-paid balances on your account result in a reduction of TRS. TRS will not therefore be granted on any payments built up in previous years to fund underpayments in a different tax year. This is explained further below.
Any overpayments made on your mortgage account which are used to fund underpayments on your account will result in a reduction of TRS. TRS cannot be granted on any payments built up in previous years to fund underpayments in a different tax year. Therefore, you may not receive TRS on an underpayment arrangement.
If you miss a repayment, e.g. if in January, no repayments are made, this will results in no TRS being granted for March. However, if you catch up on repayments by the end of the year you may be due additional TRS. This will be applied to your account at the end of the year and will be processed as follows:
TRS is based on the amount of interest which has actually been paid on the account in a given calendar year (subject to Revenue ceiling and qualifying interest). Therefore, if you do not pay your full required mortgage interest in a tax year you will not receive your full TRS allowance.