the Federal Circuit, Court of International Trade, 
Tax Court, Court of Federal Claims, Court of Ap-
peals for Veterans Claims, United States Court of 
Appeals for the Armed Forces, and any court cre-
ated by Act of Congress, the judges of which are en-
titled 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. 
SEC. 250. 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 other-
wise treated as interest under clause (i) 
VerDate Aug 31 2005 
06:00 Jul 29, 2006
Jkt 049200
PO 00000
Frm 00089
Fmt 6652
Sfmt 6201
E:\BILLS\H5970.CPH
H5970
ycherry on PROD1PC64 with BILLS
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 there-
of) that the taxpayer’s adjusted gross in-
come 
for 
the 
taxable 
year 
exceeds 
$100,000 ($50,000 in the case of a mar-
ried individual filing a separate return). 
‘‘(iii) LIMITATION.—Clause (i) shall 
not apply with respect to any mortgage in-
surance contracts issued before January 1, 
2007. 
‘‘(iv) TERMINATION.—Clause (i) shall 
not apply to amounts— 
‘‘(I) paid or accrued after De-
cember 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 sub-
paragraphs: 
‘‘(E) 
QUALIFIED
MORTGAGE
INSUR-
ANCE.—The term ‘qualified mortgage insur-
ance’ means— 
VerDate Aug 31 2005 
06:00 Jul 29, 2006
Jkt 049200
PO 00000
Frm 00090
Fmt 6652
Sfmt 6201
E:\BILLS\H5970.CPH
H5970
ycherry on PROD1PC64 with BILLS
‘‘(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 QUALI-
FIED
MORTGAGE
INSURANCE.—Any amount 
paid by the taxpayer for qualified mortgage in-
surance that is properly allocable to any mort-
gage 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 deduc-
tion shall be allowed for the unamortized bal-
ance of such account if such mortgage is satis-
fied before the end of its term. The preceding 
sentences shall not apply to amounts paid for 
qualified mortgage insurance provided by the 
Veterans Administration or the Rural Housing 
Administration.’’. 
VerDate Aug 31 2005 
06:00 Jul 29, 2006
Jkt 049200
PO 00000
Frm 00091
Fmt 6652
Sfmt 6201
E:\BILLS\H5970.CPH
H5970
ycherry on PROD1PC64 with BILLS