Page:United States Statutes at Large Volume 120.djvu/2998

 PUBLIC LAW 109–432—DEC. 20, 2006

120 STAT. 2967

Claims, Court of Appeals for Veterans Claims, United States Court of Appeals for the Armed Forces, and any court created by Act of Congress, the judges of which are entitled to hold office during good behavior.’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to sales after the date of enactment of this Act.

26 USC 1043 note.

SEC. 419. PREMIUMS FOR MORTGAGE INSURANCE.

(a) IN GENERAL.—Section 163(h)(3) (relating to qualified residence interest) is amended by adding at the end the following new subparagraph: ‘‘(E) MORTGAGE INSURANCE PREMIUMS TREATED AS INTEREST.— ‘‘(i) IN GENERAL.—Premiums paid or accrued for qualified mortgage insurance by a taxpayer during the taxable year in connection with acquisition indebtedness with respect to a qualified residence of the taxpayer shall be treated for purposes of this section as interest which is qualified residence interest. ‘‘(ii) PHASEOUT.—The amount otherwise treated as interest under clause (i) shall be reduced (but not below zero) by 10 percent of such amount for each $1,000 ($500 in the case of a married individual filing a separate return) (or fraction thereof) that the taxpayer’s adjusted gross income for the taxable year exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). ‘‘(iii) LIMITATION.—Clause (i) shall not apply with respect to any mortgage insurance contracts issued before January 1, 2007. ‘‘(iv) TERMINATION.—Clause (i) shall not apply to amounts— ‘‘(I) paid or accrued after December 31, 2007, or ‘‘(II) properly allocable to any period after such date.’’. (b) DEFINITION AND SPECIAL RULES.—Section 163(h)(4) (relating to other definitions and special rules) is amended by adding at the end the following new subparagraphs: ‘‘(E) QUALIFIED MORTGAGE INSURANCE.—The term ‘qualified mortgage insurance’ means— ‘‘(i) mortgage insurance provided by the Veterans Administration, the Federal Housing Administration, or the Rural Housing Administration, and ‘‘(ii) private mortgage insurance (as defined by section 2 of the Homeowners Protection Act of 1998 (12 U.S.C. 4901), as in effect on the date of the enactment of this subparagraph). ‘‘(F) SPECIAL RULES FOR PREPAID QUALIFIED MORTGAGE INSURANCE.—Any amount paid by the taxpayer for qualified mortgage insurance that is properly allocable to any mortgage the payment of which extends to periods that are after the close of the taxable year in which such amount is paid shall be chargeable to capital account and shall be treated as paid in such periods to which so allocated. No deduction shall be allowed for the unamortized balance of such account if such mortgage is satisfied before the

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26 USC 163.

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