### Question
How does the law define regular interest?


### Answer
Under *26 U.S.C. § 860G*, **regular interest** is defined as:

> any interest in a REMIC which is issued on the startup day with fixed terms and which is designated as a regular interest if—



(A) such interest unconditionally entitles the holder to receive a specified principal amount (or other similar amount), and



(B) interest payments (or other similar amount), if any, with respect to such interest at or before maturity—



(i) are payable based on a fixed rate (or to the extent provided in regulations, at a variable rate), or



(ii) consist of a specified portion of the interest payments on qualified mortgages and such portion does not vary during the period such interest is outstanding

#### Citation:
  - *26 U.S.C. § 860G*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter M-Regulated Investment Companies and Real Estate Investment Trusts > PART IV-REAL ESTATE MORTGAGE INVESTMENT CONDUITS**

