Creation of the income tax credit on mortgage interest for the purchase of a main residence

Article 5 of the TEPA Act creates Article 200 quaterdecies of the General Tax Code: taxpayers who buy or build their main residence receive an income tax credit equal to 20% of the loan interest paid over the first five years of repayment, excluding borrowing costs and insurance. Eligible interest is capped each year at €3,750 for a single person and €7,500 for a jointly taxed couple, plus €500 per dependant; these amounts are doubled in case of disability. The credit is set against tax due and any excess is refunded. The Constitutional Council (Decision No. 2007-555 DC of 16 August 2007) struck down the application of the scheme to loans taken out for earlier purchases; the text applies from the publication of the Act. The 2008 Finance Act raised the rate to 40% for the first year. The tax credit was abolished for loan offers issued from 1 January 2011, with earlier loans keeping it until the fifth year.