LIMITATION ON DEDUCTION FOR QUALIFIED RESIDENCE INTEREST.

SEC. 11043. LIMITATION ON DEDUCTION FOR QUALIFIED RESIDENCE INTEREST.(a) In General.—Section 163(h)(3) is amended by adding at the end the following new subparagraph:“(F) Special rules for taxable years 2018 through 2025.—“(i) In general.—In the case of taxable years beginning after December 31, 2017, and before January 1, 2026—“(I) Disallowance of home equity indebtedness interest.—Subparagraph (A)(ii) shall not apply.“(II) Limitation on acquisition indebtedness.—Subparagraph (B)(ii) shall be applied by substituting ‘$750,000 ($375,000’ for ‘$1,000,000 ($500,000’.“(III) Treatment of indebtedness incurred on or before december 15, 2017.—Subclause (II) shall not apply to any indebtedness incurred on or before December 15, 2017, and, in applying such subclause to any indebtedness incurred after such date, the limitation under such subclause shall be reduced (but not below zero) by the amount of any indebtedness incurred on or before December 15, 2017, which is treated as acquisition indebtedness for purposes of this subsection for the taxable year.“(IV) Binding contract exception.—In the case of a taxpayer who enters into a written binding contract before December 15, 2017, to close on the purchase of a principal residence before January 1, 2018, and who purchases such residence before April 1, 2018, subclause (III) shall be applied by substituting ‘April 1, 2018’ for ‘December 15, 2017’.“(ii) Treatment of limitation in taxable years after december 31, 2025.—In the case of taxable years 131 STAT. 2087 beginning after December 31, 2025, the limitation under subparagraph (B)(ii) shall be applied to the aggregate amount of indebtedness of the taxpayer described in subparagraph (B)(i) without regard to the taxable year in which the indebtedness was incurred.“(iii) Treatment of refinancings of indebtedness.—“(I) In general.—In the case of any indebtedness which is incurred to refinance indebtedness, such refinanced indebtedness shall be treated for purposes of clause (i)(III) 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.“(II) Limitation on period of refinancing.—Subclause (I) 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).“(iv) Coordination with exclusion of income from discharge of indebtedness.—Section 108(h)(2) shall be applied without regard to this subparagraph.”.(b) Effective Date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017.