26 U.S.C. § 25: Interest on certain home mortgages

the certificate credit rate, and the interest paid or accrued by the taxpayer during the taxable year on the remaining principal of the certified indebtedness amount. If the certificate credit rate exceeds 20 percent, the amount of the credit allowed to the taxpayer under paragraph (1) for any taxable year shall not exceed $2,000. If 2 or more persons hold interests in any residence, the limitation of subparagraph (A) shall be allocated among such persons in proportion to their respective interests in the residence. The term “certificate credit rate” means the rate of the credit allowable by this section which is specified in the mortgage credit certificate. to acquire the principal residence of the taxpayer, as a qualified home improvement loan (as defined in section 143(k)(4)) with respect to such residence, or as a qualified rehabilitation loan (as defined in section 143(k)(5)) with respect to such residence, and specified in the mortgage credit certificate. is issued under a qualified mortgage credit certificate program by the State or political subdivision having the authority to issue a qualified mortgage bond to provide financing on the principal residence of the taxpayer, is issued to the taxpayer in connection with the acquisition, qualified rehabilitation, or qualified home improvement of the taxpayer’s principal residence, the certificate credit rate, and the certified indebtedness amount, and is in such form as the Secretary may prescribe. which is established by a State or political subdivision thereof for any calendar year for which it is authorized to issue qualified mortgage bonds, under which the issuing authority elects (in such manner and form as the Secretary may prescribe) not to issue an amount of private activity bonds which it may otherwise issue during such calendar year under section 146, subsection (c) (relating to residence requirements), subsection (d) (relating to 3-year requirement), subsection (e) (relating to purchase price requirement), subsection (f) (relating to income requirements), subsection (h) (relating to portion of loans required to be placed in targeted areas), and paragraph (1) of subsection (i) (relating to other requirements), under which no mortgage credit certificate may be issued with respect to any residence any of the financing of which is provided from the proceeds of a qualified mortgage bond or a qualified veterans’ mortgage bond, except to the extent provided in regulations, which is not limited to indebtedness incurred from particular lenders, except to the extent provided in regulations, which provides that a mortgage credit certificate is not transferrable, and if the issuing authority allocates a block of mortgage credit certificates for use in connection with a particular development, which requires the developer to furnish to the issuing authority and the homebuyer a certificate that the price for the residence is no higher than it would be without the use of a mortgage credit certificate. each qualified mortgage certificate credit program shall be treated as a separate issue, the certified indebtedness amount of each mortgage credit certificate issued under such program, by the certificate credit rate specified in such certificate, paragraph (1) of section 143(d) shall be applied by substituting “100 percent” for “95 percent or more”. The certificate credit rate specified in any mortgage credit certificate shall not be less than 10 percent or more than 50 percent. the certified indebtedness amount of each mortgage credit certificate issued under such program, by the certificate credit rate with respect to such certificate, For purposes of subparagraph (A), the term “nonissued bond amount” means, with respect to any qualified mortgage credit certificate program, the amount of qualified mortgage bonds which the issuing authority is otherwise authorized to issue and elects not to issue under subsection (c)(2)(A)(ii). If the credit allowable under subsection (a) for any taxable year exceeds the applicable tax limit for such taxable year, such excess shall be a carryover to each of the 3 succeeding taxable years and, subject to the limitations of subparagraph (B), shall be added to the credit allowable by subsection (a) for such succeeding taxable year. the credit allowable under subsection (a) for such taxable year determined without regard to this paragraph, and the amounts which, by reason of this paragraph, are carried to such taxable year and are attributable to taxable years before the unused credit year. For purposes of this paragraph, the term “applicable tax limit” means the limitation imposed by section 26(a) for the taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 23 and 25D). Subsection (a) shall not apply to any indebtedness if all the requirements of subsection (c)(1), (d), (e), (f), and (i) of section 143 and clauses (iv), (v), and (vii) of subsection (c)(2)(A), were not in fact met with respect to such indebtedness. Except to the extent provided in regulations, the requirements described in the preceding sentence shall be treated as met if there is a certification, under penalty of perjury, that such requirements are met. beginning on the date such certificate is issued, and the certificate is revoked by the issuing authority, or the residence to which such certificate relates ceases to be the principal residence of the individual to whom the certificate relates. A certificate shall not apply to any indebtedness which is incurred after the close of the second calendar year following the calendar year for which the issuing authority made the applicable election under subsection (c)(2)(A)(ii). Any issuing authority which revokes any mortgage credit certificate shall notify the Secretary of such revocation at such time and in such manner as the Secretary shall prescribe by regulations. The Secretary may prescribe regulations which allow the administrator of a mortgage credit certificate program to reissue a mortgage credit certificate specifying a certified mortgage indebtedness that replaces the outstanding balance of the certified mortgage indebtedness specified on the original certificate to any taxpayer to whom the original certificate was issued, under such terms and conditions as the Secretary determines are necessary to ensure that the amount of the credit allowable under subsection (a) with respect to such reissued certificate is equal to or less than the amount of credit which would be allowable under subsection (a) with respect to the original certificate for any taxable year ending after such reissuance. the eligibility requirements for such certificate, the methods by which such certificates are to be issued, and such other information as the Secretary may require. No credit shall be allowed under subsection (a) for any interest paid or accrued to a person who is a related person to the taxpayer (within the meaning of section 144(a)(3)(A)). The term “principal residence” has the same meaning as when used in section 121. The term “qualified rehabilitation” has the meaning given such term by section 143(k)(5)(B). The term “qualified home improvement” means an alteration, repair, or improvement described in section 143(k)(4). The term “qualified mortgage bond” has the meaning given such term by section 143(a)(1). For purposes of this section, the term “single family residence” includes any manufactured home which has a minimum of 400 square feet of living space and a minimum width in excess of 102 inches and which is of a kind customarily used at a fixed location. Nothing in the preceding sentence shall be construed as providing that such a home will be taken into account in making determinations under section 143. If for any calendar year any mortgage credit certificate program which satisfies procedural requirements with respect to volume limitations prescribed by the Secretary fails to meet the requirements of paragraph (2) of subsection (d), such requirements shall be treated as satisfied with respect to any certified indebtedness of such program, but the applicable State ceiling under subsection (d) of section 146 for the State in which such program operates shall be reduced by 1.25 times the correction amount with respect to such failure. Such reduction shall be applied to such State ceiling for the calendar year following the calendar year in which the Secretary determines the correction amount with respect to such failure. For purposes of paragraph (1), the term “correction amount” means an amount equal to the excess credit amount divided by 0.25. the credit amount for any mortgage credit certificate program, over the amount which would have been the credit amount for such program had such program met the requirements of paragraph (2) of subsection (d). For purposes of clause (i), the term “credit amount” means the sum of the products determined under clauses (i) and (ii) of subsection (d)(2)(A). In the case of a State having one or more constitutional home rule cities (within the meaning of section 146(d)(3)(C)), the reduction in the State ceiling by reason of paragraph (1) shall be allocated to the constitutional home rule city, or to the portion of the State not within such city, whichever caused the reduction. The provisions of this subsection shall not apply in any case in which there is a certification program which is designed to ensure that the requirements of this section are met and which meets such requirements as the Secretary may by regulations prescribe. The Secretary may waive the application of paragraph (1) in any case in which he determines that the failure is due to reasonable cause. the name, address, and social security account number of the individual to which the certificate was issued, the certificate’s issuer, date of issue, certified indebtedness amount, and certificate credit rate, and such other information as the Secretary may require by regulations. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations which may require recipients of mortgage credit certificates to pay a reasonable processing fee to defray the expenses incurred in administering the program. The Secretary is authorized to enter into contracts with any person to provide services in connection with the administration of this section. For provisions increasing the tax imposed by this chapter to recapture a portion of the Federal subsidy from the use of mortgage credit certificates, see section 143(m). Except as otherwise provided in this subsection, the amendments made by this section [enacting sections 25F and 139K of this title and amending this section] shall apply to taxable years ending after December 31, 2026 . The amendments made by subsection (b) [enacting section 139K of this title ] shall apply to amounts received after December 31, 2026 , in taxable years ending after such date.” Except as otherwise provided in this subsection, the amendments made by this section [enacting this section and section 6708 of this title , redesignating former section 25 as 26, and amending sections 23, 28 to 30, 38, 55, 103A, 163, 168, and 901 of this title] shall apply to interest paid or accrued after December 31, 1984 , on indebtedness incurred after December 31, 1984 . The amendments made by this section shall apply to elections under section 25(c)(2)(A)(ii) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by this section) for calendar years after 1983.”