on such loan is accrued) exceed $750,000. 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) 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 single family residence— (i) which is the principal residence (within the meaning of section 121) of its occupant, and (ii) which is located in a rural area within the meaning of section 1.11(b)(3) of the Agricultural Credit Act of 1987 ( 12 U.S.C. 2019(b)(3) ), and (C) any aquaculture facility. (3) 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) that is located in any State. (d) Coordination with section 265 Qualified real estate loans shall be treated as obligations described in section 265(a)(2) the interest on which is wholly exempt from the taxes imposed by this subtitle. . (b) Clerical amendment The table of sections for such subpart III is amended by inserting after the item relating to section 139I the following new item: Sec. 139J. Interest on loans secured by rural or agricultural real property. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.