- 9 - B. Applicability of Section 163(h)(2)(D) In particular, respondent argues that petitioners’ interest payments fail to satisfy the requirements for the exception provided in section 163(h)(2)(D) for “qualified residence interest”. That is because, although petitioners’ principal residence meets the definition of a “qualified residence” (see sec. 163(h)(4)(A)(i)(I)), and although the loans constituted “acquisition indebtedness” (which, pursuant to section 163(h)(3)(B)(i)(I), includes indebtedness “incurred in * * * constructing, or substantially improving any qualified residence”), repayment of the loans was not secured by such residence as required by section 163(h)(3)(B)(i)(II). We agree with respondent that, based upon the stipulated facts, the $64,000 interest payment does not constitute “qualified residence interest” within the meaning of section 163(h)(2)(D) and (3). 5(...continued) (A) interest paid or accrued on indebtedness properly allocable to a trade or business (other than the trade or business of performing services as an employee), (B) any investment interest (within the meaning of subsection (d)), * * * * * * * (D) any qualified residence interest (within the meaning of paragraph (3)),Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011