qualified rehabilitation
(5) Qualified rehabilitation loan (A) In general The term “qualified rehabilitation loan” means any owner-financing provided in connection with— (i) a qualified rehabilitation, or (ii) the acquisition of a residence with respect to which there has been a qualified rehabilitation, but only if the mortgagor to whom such financing is provided is the first resident of the residence after the completion of the rehabilitation. (B) Qualified rehabilitation For purposes of subparagraph (A), the term “qualified rehabilitation” means any rehabilitation of a building if— (i) there is a period of at least 20 years between the date on which the building was first used and the date on which the physical work on such rehabilitation begins, (ii) in the rehabilitation process— (I) 50 percent or more of the existing external walls of such building are retained in place as external walls, (II) 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and (III) 75 percent or more of the existing internal structural framework of such building is retained in place, and (iii) the expenditures for such rehabilitation are 25 percent or more of the mortgagor’s adjusted basis in the residence. For purposes of clause (iii), the mortgagor’s adjusted basis shall be determined as of the completion of the rehabilitation or, if later, the date on which the mortgagor acquires the residence.