Page:United States Statutes at Large Volume 100 Part 3.djvu/439

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2247

"(3) QUALIFIED RESIDENCE INTEREST.—For purposes of this subsection— "(A) IN GENERAL.—The term 'quahfied residence interest' means interest which is paid or accrued during the taxable year on indebtedness which is secured by any property > n which (at the time such interest is paid or accrued) is a qualified residence of the taxpayer. "(B) LIMITATION ON AMOUNT OF INTEREST.—The term 'qualified residence interest' shall not include any interest •ompaid or accrued on indebtedness secured by any qualified residence which is allocable to that portion of the principal "i? amount of such indebtedness which, when added to the outstanding aggregate principal amount of all other indebt^r.ir edness previously incurred and secured by such qualified residence, exceeds the lesser of— "(i) the fair market value of such qualified residence, or "(ii) the sum of— "(I) the taxpayer's basis in such qualified residence (adjusted only by the cost of any improve• -• ments to such residence), plus ''.'•• "(II) the aggregate amount of qualified indebtedness of the taxpayer with respect to such qualified residence. "(C) COST NOT LESS THAN BALANCE OF INDEBTEDNESS INCURRED ON OR BEFORE AUGUST 16, 1936.—The amount under

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subparagraph (B)(iiXI) at any time after August 16, 1986, shall not be less than the outstanding aggregate principal amount (as of such time) of indebtedness which was incurred on or before August 16, 1986, and which was secured by the qualified residence on August 16, 1986. "(D)

TIME FOR DETERMINATION.—Except as provided in

regulations, any determination under subparagraph (B) shall be made as of the time the indebtedness is incurred. "(4) QUALIFIED INDEBTEDNESS.—For purposes of this subsection— "(A) IN GENERAL.—The term 'qualified indebtedness' means indebtedness secured by a qualified residence of the taxpayer which is incurred after August 16, 1986, to pay for— "(i) qualified medical expenses, or "(ii) qualified educational expenses, which are paid or incurred within a reasonable period of time before or after such indebtedness is incurred. "(B) QUALIFIED MEDICAL EXPENSES.—For purposes of this paragraph, the term 'qualified medical expenses' means amounts, not compensated for by insurance or otherwise, incurred for medical care (within the meaning of subparagraphs (A) and (B) of section 213(d)(1)) for the taxpayer, his spouse, or a dependent. "(C) QUALIFIED EDUCATIONAL EXPENSES.—For purposes of this paragraph— "(i) IN GENERAL.—The term 'qualified educational expenses' means qualified tuition and related expenses of the taxpayer, his spouse, or a dependent for attended fi;?'. ance at an educational institution described in section 170(b)(l)(A)(ii).

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