THOUSANDS of homeowners face a shock when mortgage interest relief ends next year, the Department of Finance has warned.
Officials have warned that these people "face a cliff" when they will no longer get any tax relief for paying their mortgage.
Mortgage interest for home loans is currently available to persons who purchased their home between 2004 and 2012.
Some 310,400 mortgage holders are in receipt of mortgage interest relief on their home. The vast bulk of these bought between 2004 and 2008.
The last government extended the relief to boom buyers, so-called "worst-time buyers". These are people who bought between 2004 and 2008, when property prices peaked.
The relief ceased to exist for those who bought since January 2013.
Families are set to lose tax relief on their monthly repayments when mortgage interest relief is phased out by the end of 2017.
The average benefit of mortgage interest relief to families in 2015 was €750.
Providing some form of mortgage interest relief for these people became a deal breaker in the talks between Fianna Fáil and Fine Gael before the Government was formed in May.
Retaining mortgage interest relief beyond the current end date of December 2017 on a tapered basis was a key part of the framework agreed between the two political parties.
Now pre-budget tax documents drawn up by civil servants outline three ways the impact of the ending of the relief can be eased.
The relief cost €232m last year, equating to €62 a month for those who claim it.
The department's tax strategy paper looks at phasing out the relief gradually up to 2020 by reducing it in small chunks each year. This would, for example, see the relief reduced to 75pc of its current level in 2018 and 50pc in 2019.
Another option being looked at is reducing the amount of mortgage interest that is included when calculating how much the relief is worth to homeowners.
Also being looked at is continuing the relief for those who bought between 2004 and 2008. This would help those most affected by negative equity, the department said.