Sec. 1402. Mortgage interest

792 words·~4 min read·/bill/113/hr/1/ih/section-1402

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Paragraph

(3)of section 163(h) is amended to read as follows: For purposes of this subsection— The term qualified residence interest means any interest which is paid or accrued during the taxable year on indebtedness which— is incurred in acquiring, constructing, or substantially improving any qualified residence (determined as of the time the interest is accrued) of the taxpayer, and is secured by such residence. Such term also includes interest on any indebtedness secured by such residence resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence (or this sentence); but only to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness. The aggregate amount of indebtedness taken into account under subparagraph

(A)for any period shall not exceed $500,000 (half of such amount in the case of a married individual filing a separate return). For purposes of applying clause

(i)with respect to any indebtedness incurred during a calendar year after 2014 and before 2018, the $500,000 amount in clause

(i)shall be increased by the phase-in amount determined in accordance with the following table: In the case of indebtedness incurred during: The phase-in amount is: 2015 $375,000 2016 $250,000 2017 $125,000 In the case of any indebtedness which is incurred to refinance indebtedness to which clause

(ii)applies (or to which this clause applies), such refinanced indebtedness shall be treated for purposes of clause

(ii)as incurred on the date that the original indebtedness was incurred to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness. In the case of any pre-January 1, 2015, indebtedness, this paragraph shall apply as in effect immediately before the enactment of the Tax Reform Act of 2014 . The limitation of subparagraph

(B)(after application of clause

(ii)thereof) shall be reduced (but not below zero) by the aggregate amount of outstanding pre-January 1, 2015, indebtedness of the taxpayer with respect to which interest is allowable as a deduction by reason of this subparagraph. For purposes of this subparagraph, the term pre-January 1, 2015, indebtedness means— any indebtedness incurred before January 1, 2015, and any indebtedness incurred on or after such date to refinance indebtedness described in subclause

(I)(or refinanced indebtedness meeting the requirements of this subclause) to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness. Subparagraphs (B)(iii) and (C)(iii)(II) shall not apply to any indebtedness after— the expiration of the term of the original indebtedness, or if the principal of such original indebtedness is not amortized over its term, the expiration of the term of the 1st refinancing of such indebtedness (or if earlier, the date which is 30 years after the date of such 1st refinancing). The amount otherwise treated as qualified residence interest (determined without regard to this subparagraph) with respect to any residence of the taxpayer for any taxable year shall be reduced by the sum of the amounts excludable from the gross income of such taxpayer under sections 107 and 119 with respect to such residence. . Section 108(h)(2) is amended to read as follows: For purposes of this section, the term qualified principal residence indebtedness means indebtedness described in section 163(h)(3) applied without regard to clauses

(ii)and

(iii)of subparagraph

(B)thereof and by substituting $2,000,000 for $500,000 in subparagraph (B)(i) thereof. . Section 163(h) is amended— by striking subparagraph

(E)in paragraph (3), by striking subparagraphs

(E)and

(F)in paragraph (4), and by striking paragraph (5). Section 265(a)(6) is amended— by striking an amount as— and all that follows and inserting an amount as a military housing allowance. , and by striking in the heading thereof. parsonage and Paragraph

(2)of section 6050H(b) is amended by striking and at the end of subparagraph (C), by redesignating subparagraph

(D)as subparagraph

(F)and by inserting after subparagraph

(C)the following new subparagraphs: the amount of outstanding principal on the mortgage as of the beginning of such calendar year, the date of the origination of the mortgage, and . Paragraph

(2)of section 6050H(d) is amended by striking subsection (b)(2)(C) and inserting subparagraphs (C), (D), and

(E)of subsection (b)(2) . The amendments made by subsection

(a)shall apply to interest paid or accrued in taxable years beginning after December 31, 2014, with respect to indebtedness incurred before, on, or after such date. For application of the amendments made by subsection

(a)to grandfathered indebtedness, see section 163(h)(3)(C) of the Internal Revenue Code of 1986 as amended by this section. The amendments made by subsection

(b)shall apply to returns and statements for calendar years after December 31, 2014.