republic-os/legal/us/code/title-26/chapter-1/section-139l.md

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LegalText	26 U.S.C. § 139L	Interest on loans secured by rural or agricultural real property	us	united_states_code	code_section	26	INTERNAL REVENUE CODE	1	NORMAL TAXES AND SURTAXES	139L	26 U.S.C. § 139L	current	119-100	2026-06-26	official	https://uscode.house.gov/download/releasepoints/us/pl/119/100/xml_usc26@119-100.zip	/us/usc/t26/s139L	data/legal/raw/us/code/title-26/usc26.xml	e542feb25748bec4f8872ffa7ef9b42373792a1c11ea39bada6b21caf60f0e74	a261f094809116f42a96648a3d5eee80fa010379d67412551c21dd5c900b27f4	3e7d889a978ef584c7d0689752f76b353f8ad5a97e901c6f084434d4b04796a3	2026-07-04	official	legal us-code

26 U.S.C. § 139L - Interest on loans secured by rural or agricultural real property

Text

(a) In general Gross income shall not include 25 percent of the interest received by a qualified lender on any qualified real estate loan.

(b) Qualified lender For purposes of this section, the term “qualified lender” means—

(1) any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.),

(2) any State- or federally-regulated insurance company,

(3) any entity wholly owned, directly or indirectly, by a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106) if—

(A) such entity is organized, incorporated, or established under the laws of the United States or any State, and

(B) the principal place of business of such entity is in the United States (including any territory of the United States),

(4) any entity wholly owned, directly or indirectly, by a company that is considered an insurance holding company under the laws of any State if such entity satisfies the requirements described in subparagraphs (A) and (B) of paragraph (3), and

(5) with respect to interest received on a qualified real estate loan secured by real estate described in subsection (c)(3)(A), any federally chartered instrumentality of the United States established under section 8.1(a) of the Farm Credit Act of 1971 (12 U.S.C. 2279aa–1(a)).

(c) Qualified real estate loan For purposes of this section—

(1) In general The term “qualified real estate loan” means any loan—

(A) secured by—

(i) rural or agricultural real estate, or

(ii) a leasehold mortgage (with a status as a lien) on rural or agricultural real estate,

(B) made to a person other than a specified foreign entity (as defined in section 7701(a)(51)), and

(C) made after the date of the enactment of this section.

For purposes of the preceding sentence, the determination of whether property securing such loan is rural or agricultural real estate shall be made as of the time the interest income on such loan is accrued.

(2) Refinancings For purposes of subparagraphs (A) and (C) of paragraph (1), a loan shall not be treated as made after the date of the enactment of this section to the extent that the proceeds of such loan are used to refinance a loan which was made on or before the date of the enactment of this section (or, in the case of any series of refinancings, the original loan was made on or before such date).

(3) Rural or agricultural real estate The term “rural or agricultural real estate” means—

(A) any real property which is substantially used for the production of one or more agricultural products,

(B) any real property which is substantially used in the trade or business of fishing or seafood processing, and

(C) any aquaculture facility.

Such term shall not include any property which is not located in a State or a possession of the United States.

(4) Aquaculture facility The term “aquaculture facility” means any land, structure, or other appurtenance that is used for aquaculture (including any hatchery, rearing pond, raceway, pen, or incubator).

(d) Coordination with section 265 In the case of any qualified real estate loan, section 265 shall be applied—

(1) by treating any qualified real estate loan for purposes of subsection (a)(2) thereof as an obligation the interest on which is wholly exempt from the taxes imposed by this subtitle,

(2) by substituting “25 percent of the interest on indebtedness” for “Interest on indebtedness” in such subsection (a)(2),

(3) by treating 25 percent of the adjusted basis of any qualified real estate loan as adjusted basis of a tax-exempt obligation described in subsection (b)(4)(B) thereof, and

(4) by substituting “25 percent of the amount of such indebtedness” for “the amount of such indebtedness” in subsection (b)(6)(A)(a)(ii) 11 So in original. Probably should be “(b)(6)(A)(ii)”. thereof.

(Added Pub. L. 119–21, title VII, § 70435(a), July 4, 2025, 139 Stat. 246.)

Notes

Editorial Notes

References in TextThe Federal Deposit Insurance Act, referred to in subsec. (b)(1), is act Sept. 21, 1950, ch. 967, § 2, 64 Stat. 873, which is classified generally to chapter 16 (§ 1811 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see Short Title note set out under section 1811 of Title 12 and Tables. The date of the enactment of this section, referred to in subsec. (c)(1)(C), (2), is the date of enactment of Pub. L. 119–21, which was approved July 4, 2025.

Statutory Notes and Related Subsidiaries

Effective DatePub. L. 119–21, title VII, § 70435(c), July 4, 2025, 139 Stat. 247, provided that: “The amendments made by this section [enacting this section] shall apply to taxable years ending after the date of the enactment of this Act [July 4, 2025].”