PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3391
(5) Subparagraph (C) of section 163(h)(3) of the 1986 Code (defining qualified residence interest) is amended to read as follows: "(C) COST NOT LESS THAN BALANCE OF INDEBTEDNESS IN-
CURRED ON OR BEFORE AUGUST 16, 1986.— "(i) IN GENERAL.—The amount under subparagraph (B)(ii)(I) at any time after August 16, 1986, shall not be less than the outstanding principal amount (as of such time) of indebtedness— "(I) which was incurred on or before August 16, 1986, and which was secured by the qualified residence on August 16, 1986, or "(II) which is secured by the qualified residence and was incurred after August 16, 1986, to refinance indebtedness described in subclause (I) (or refinanced indebtedness meeting the requirements of this subclause) to the extent (immediately after the refinancing) the principal amount of the indebtedness resulting from the refinancing does not exceed the principal amount of the refinanced indebtedness (immediately before the refinancing). "(ii)
LIMITATION
ON
PERIOD
OF REFINANCING.—
Subclause (II) of clause (i) shall not apply to any indebtedness after— "(I) the expiration of the term of the indebtedness described in clause (i)(D, or "(II) if the principal of the indebtedness described in clause (i)(1) 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 refinancing)." (6)(A) The heading for section 163(h)(5) of the 1986 Code is amended to read as follows: "(5) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes of
(B) Paragraph (5) of section 163(h) of the 1986 Code is amended— (i) by striking out "For purposes of this subsection—" in subparagraph (A), and (ii) by striking out "For purposes of this paragraph, any" in subparagraph (B) and inserting in lieu thereof "Any". (7) Clause (iii) of section 163(h)(5)(A) of the 1986 Code is amended by striking out "USED OR" in the heading thereof and by striking out "or use". (8) Section 163(h)(5) of the 1986 Code is amended by adding at the end thereof the following new subparagraphs: "(C) UNENFORCEABLE SECURITY INTERESTS.—Indebtedness
shall not fail to be treated as secured by any property solely because, under any applicable State or local homestead or other debtor protection law in effect on August 16, 1986, the security interest is ineffective or the enforceability of the security interest is restricted. "(D) SPECIAL RULES FOR ESTATES AND TRUSTS.—For purposes of determining whether any interest paid or accrued by an estate or trust is qualified residence interest, any residence held by such estate or trust shall be treated as a
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