This case involves a question of first impression in this circuit: the statutory interpretation of the newly enacted homestead exemption cap, 11 U.S.C. § 522(p)(l), found in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”). The issue is whether the homestead exemption cap applies to a homestead interest established within the 1,215-day period preceding the filing of the bankruptcy petition despite the fact that the debtor acquired title to the property before that statutory period. The bankruptcy court answered this question in the negative, and the district court *216 affirmed. For the reasons discussed below, we affirm.
I. Factual & Procedural Background
On January 17, 1994, the Appellee, Sarah K. Rogers (“Rogers” or “debtor”), inherited a 72.5 acre tract of real property known as 14849 Kelly Road, Forney, Texas (“Forney Property”). Rogers was single when she inherited the Forney Property from her mother. Subsequently, Rogers married George E. Rogers, and they purchased a 5.1 acre tract of real property known as 8644 South F.M. 549, Rockwall, Texas (“Rockwall Property”). Rogers and her husband constructed a residence on the Rockwall Property and claimed it as their homestead. In January 2004, Rogers separated from her husband, moved into a mobile home on the Forney Property, and claimed the Forney Property as her homestead. On April 6, 2004, Rogers and her husband divorced. Pursuant to the divorce decree, Rogers was divested of all right, title and interest in the Rockwall Property, and no equity from the Rockwall Property was rolled-over into the Forney Property. The divorce decree awarded the Forney Property to Rogers, but this award simply affirmed the reality that the Forney Property was her separate property because she inherited it from her mother before marriage.
Prior to 2004, Rogers and her husband had borrowed money from the Appellant, Jack C. Wallace, to embark on an ultimately unsuccessful business venture. Wallace eventually sued to recover the unpaid loan balance, and on April 19, 2004, he obtained a state-court judgment against both the debtor and her then ex-husband, for the total principal amount of $316,180.95, in addition to court costs and post-judgment interest.
On September 28, 2005, the debtor filed for relief under Chapter 7 of the Bankruptcy Code. The debtor elected state law exemptions in accordance with the provisions of 11 U.S.C. § 522(b). In her Schedule C, the debtor claimed her homestead exemption on the Forney Property in the amount of $859,000. Wallace filed a timely objection to the debtor’s claimed homestead exemption, arguing that 11 U.S.C. § 522(p)(l) capped the debtor’s homestead exemption at the federal statutory amount of $125,000 because the debtor acquired her homestead interest in the Forney Property within the 1,215-day period preceding the filing of her bankruptcy petition.
The bankruptcy court orally denied Wallace’s objection at a hearing held on January 18, 2006, and this ruling was memorialized by written order dated February 7, 2006. On October 16, 2006, the district court affirmed the bankruptcy court’s order overruling Wallace’s objection to the claimed homestead exemption. Wallace then perfected this timely appeal.
II. Analysis
A. Standard of Review
We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. “We review the decision of the district court by applying the same standard to the bankruptcy court’s findings of fact and conclusions of law as the district court applied.”
Total Minatome Corp. v. Jack/Wade Drilling, Inc. (In re Jack/Wade Drilling, Inc.),
B. The debtor is entitled to her full homestead exemption.
1. 11 U.S.C. § 522(p)(l)
The bankruptcy estate is comprised of “all legal or equitable interests of the
*217
debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1);
Owen v. Owen,
Enacted as part of BAPCPA, 11 U.S.C. § 522(p)(l) limits the state law homestead exemption under certain circumstances. 1 Section 522(p)(l) prevents the debtor from exempting certain interests from the bankruptcy estate if they were acquired by the debtor during the statutory period and their aggregate value exceeds a certain dollar threshold. The statute reads, in relevant part:
[A]s a result of electing ... to exempt property under State or local law, a debtor may not exempt any amount of interest that was acquired by the debtor during the 1215-day period preceding the date of the filing of the petition that exceeds in the aggregate [$125,000] 2 in value in — real or personal property that the debtor or dependent of the debtor claims as a homestead.
11 U.S.C. § 522(p)(l)(D). The statute further states that “any amount of such interest does not include any interest transferred from a debtor’s previous principal residence (which was acquired prior to the beginning of such 1215-day period) into the debtor’s current principal residence, if the debtor’s previous and current residences are located in the same State.” Id. § 522(p)(2)(B).
2. The bankruptcy court held that the term “interest” refers to title, and the district court held that the term “interest” refers to equity.
Both the bankruptcy court and the district court held that Rogers was entitled to her homestead exemption, but they gave different reasons for this holding. The bankruptcy court predominantly focused on construing the relationship between different phrases in § 522(p)(l)(D) while the district court focused on interpreting the meaning of the term “interest.” Ultimately, the two courts interpreted the term “interest” differently: the bankruptcy court interpreted it to mean an unquantifiable “property interest,” which presumably refers to title or fee ownership, and the district court interpreted it to mean “some legal or equitable interest that can be quantified by a monetary figure,” which presumably refers to equity. Both courts reached the same conclusion regarding the applicability of § 522(p)(l)(D) because a homestead interest is not the equivalent of title or equity.
The bankruptcy court construed § 522(p)(l) to mean that a debtor “can’t exempt any amount in excess of $125,000 if an interest in property was acquired by the debtor during the 1,215 day period preceding the date of the filing of the petition.” Thus, the bankruptcy court *218 concluded that the phrase “any amount” modifies the phrase “that exceeds in the aggregate $125,000.” In the words of the bankruptcy court, “it’s got to be the interest that’s acquired, not an amount of interest.” The bankruptcy court concluded that § 522(p)(l) was inapplicable because Rogers acquired her “property interest” in the Forney Property in 1994, which was outside the statutory period.
Although the Texas Supreme Court has characterized the homestead interest as a “legal interest” created by the Texas Constitution, the bankruptcy court held that this “legal interest” was not the type of “property interest” covered by § 522(p)(l). Although it did not further define the term “property interest,” the bankruptcy court’s conclusion that the phrase “any amount” does not modify the term “interest” strongly suggests that it equated acquiring a “property interest” with acquiring title to the property. Furthermore, the only case cited by the bankruptcy court at the hearing held that the term “interest” refers to title, not equity.
See In re Blair,
Based on the legislative history, the bankruptcy court concluded that the purpose of the statute was to close the “mansion loophole” and prevent debtors from moving to states with more generous homestead exemptions on the eve of bankruptcy in order to avail themselves of those exemptions. After observing that Rogers did not move to Texas in anticipation of bankruptcy and that her homestead designation of the Forney Property was precipitated by divorce, the bankruptcy judge overruled Wallace’s objection and held that Rogers may exempt the entirety of her homestead from the bankruptcy estate.
On appeal, the district court affirmed the bankruptcy court’s order.
Wallace v. Rogers (In re Rogers),
(N.D.Tex.2006). Unlike the bankruptcy court, the district court assumed that the phrase “any amount” modifies the term “interest,” so the issue was whether “the characterization of real property as a homestead qualifies] as an ‘interest’ within the phrase ‘debtor may not exempt any amount of interest.’ ” Id. at 795. The district court held that the statutory language of § 522(p)(l) was unambiguous and that the term “ ‘interest’ refers to some legal or equitable interest that can be quantified by a monetary figure.” Id. at 796. In support of its holding that “interest” refers to a quantitative measure, the district court observed that (1) the term “interest” is modified by the term “amount,” which is a quantitative term; (2) the statute mandates that the “amount of interest” may not exceed in the aggregate a specified dollar amount; and (3) § 522(p)(2)(B) allows for transfer of any amount of interest from the debtor’s previous principal residence that was acquired before the statutory period. Id. at 796-97. Regarding this third point, the district court noted that both § 522(p)(l) and § 522(p)(2)(B) used the term “interest,” and it reasoned that only equity, which has a quantitative value, can be rolled-over into a new property, not a homestead interest. Id. at 797.
The district court observed that it is impossible “to have a ‘quantity’ of classification as homestead.”
Id.
The district court disagreed with the bankruptcy court’s analysis in
In re Greene,
3. Three other bankruptcy courts have addressed this same legal issue.
Two bankruptcy courts have held that § 522(p)(l) does not apply to a homestead interest established within the 1,215-day period if the debtor acquired title the property before that period.
See In re Lyons,
In
Lyons,
the debtor purchased the property on April 26, 1977 and recorded a homestead declaration on August 12, 2004.
In
Reinhard,
the debtor and his wife (“the Reinhards”) acquired title to a Florida property (the “Seaside Property”) on February 24, 1995.
*220 The Reinhard court asserted that the acquisition of an interest in property and the acquisition of homestead status are distinct concepts because homestead status attaches to protect the property after it is acquired by the debtor. Id. at 319. The Reinhard court stated the following:
Homestead is simply a status, constitutionally defined, which exempts certain property from execution and limits its alienability. It is not a property interest. When a Florida resident’s property acquires homestead status, the owner does not acquire any of the rights traditionally associated with property interests: the right to possession, the right to use, the right to transfer—the owner already holds whatever of these he has. Accordingly, homestead status in Florida is not properly conceptualized as a stick in the bundle; rather, it is a protective safe in which the bundle is put.
Id. Thus, the Reinhard court concurred with the conclusion of Rogers and Lyons that a homestead is a classification of property, not a “property interest” that implicates § 522(p)(l).
Relying in part on the district court’s opinion in this case, the Reinhard court held that the term “interest” refers to “a quantitative or monetary value in property.” Id. at 320. The Reinhard court further elaborated on this concept when it stated that “the debtor must acquire some amount of interest in the value of one of the four types of property listed during the 1215-day period in order for the cap to apply.” Id. According to the Reinhard court, § 522(p)(l) refers to the acquisition of monetary value in property, not in an exemption. Id. The debtor does not acquire additional monetary value in the property when she designates it as her homestead; rather, the designation merely protects the existing monetary value that the debtor acquired in the property before filing for bankruptcy. See id. at 321 (“Homestead status simply exempts the homesteader’s existing share in the property from forced sale and limits its alien-ability. Therefore, the Debtor did not acquire any amount of interest in value in the Seaside Property when it acquired homestead status.”).
To date, only one bankruptcy court has reached a conclusion contrary to that of
Rogers, Lyons,
and
Reinhard.
In
Greene,
the debtor purchased a 67-acre parcel of undeveloped land (the “Sparks Property”) in May 1994.
In Greene, the debtor argued that § 522(p)(l) does not apply because he purchased the property more than 1,215 days before he filed the petition. Id. at 840. In rejecting this argument, the Greene court stated that the homestead exemption is a “property interest” that “lies dormant and inactive until it is acquired by the debtor.” Id. at 842. In the words of the Greene court, “[w]hat must be acquired during the 1,215 day period is the homestead exemp *221 tion, not the real property. These are separate interests.” Id. at 842-43. Although the Greene court recognized that the debtor’s interest in the property includes title to the property, it insisted that the term “interest” refers to a broader concept. See id. at 843 (“Whatever Debtor had in his bundle of rights and interests pertaining to the Property, homestead protection was not one of them.”). Thus, the Greene court concluded that the debtor’s homestead interest “is a property interest acquired within 1,215 days of his bankruptcy petition and is limited to $125,000 pursuant to Section 522(p).” Id.
I. Other courts have addressed the meaning of the term “interest” in cases involving different facts.
For purposes of § 522(p)(l), other courts have generally defined “interest” as either title
5
or equity.
6
Those courts adopting the equity definition have been forced to address complex issues regarding passive and active equity appreciation during the 1,215-day period.
See In re Rasmussen,
5. A homestead interest is not the equivalent of title or equity.
We find it unnecessary at this time to pick a side in the title versus equity debate. A homestead interest is not the equivalent of title or equity. In this case, Rogers acquired title to the property when she inherited it from her mother in 1994, which was outside the statutory period. Those courts adopting the title definition of “interest” would conclude that § 522(p)(l) is inapplicable to Rogers.
See In re Anderson,
Wallace argues that Rogers acquired an interest in the Forney Property during the 1,215-day period because the divorce decree divested the debtor’s husband of “all right, title, interest, and claim” in the Forney Property and awarded it to the debtor. Recently, a bankruptcy court addressed the issue of whether acquiring an ex-spouse’s community property interest in the homestead property is a form of active equity appreciation that is subject to § 522(p)(l). If the Forney Property had constituted the community property of the debtor and her husband, then Wallace’s argument might have some merit.
See In re Presto,
6. A homestead interest is not covered by § 522(p)(l) because it does not constitute a vested economic interest in property.
Wallace does not appear to quarrel with the proposition that the debt- or’s acquisition of title or equity during the 1,215-day period can implicate the homestead exemption cap. He is simply advocating a more expansive definition of “interest” that includes a “homestead interest.” Although other courts have interpreted the term “interest” more narrowly, we must determine whether the term refers to a broader concept that includes a homestead interest.
9
“The answer to this federal question, however, largely depends upon state law.”
United States v. Craft,
A common idiom describes property as a “bundle of sticks” — a collection of individual rights which, in certain combinations, constitute property. State law determines only which sticks are in a person’s bundle. Whether those sticks qualify as “property” for purposes of the federal tax lien statute is a question of federal law. In looking to state law, we must be careful to consider the substance of the rights state law provides, not merely the labels the State gives these rights or the conclusions it draws from them. Such state law labels are irrelevant to the federal question of which bundles of rights constitute property that may be attached by a federal tax lien.
Id.
at 278-79,
Under Texas law, “[t]he homestead interest is a legal interest created by the constitution that provides prophylactic protection from all but [a few] types of constitutionally permitted liens against homesteads. This interest ... gives protective legal security rather than vested economic rights.”
10
Heggen v. Pemelton,
Unlike a homestead interest, title and equity both constitute vested economic interests in the homestead property that can be acquired during the 1,215-day period preceding the filing of the petition. These interests are vested because they have an ascertainable economic value at the moment they are acquired by the debt- or. In contrast, for purposes of federal bankruptcy law, the homestead exemption is valueless until it is claimed in bankruptcy, such that any value attributable to the exemption is not realized by the debtor until after the filing of the petition. Wallace essentially argues that “interest” refers to all rights that enhance a debtor’s claimed exemption on Schedule C. However, we believe that “interest” refers to property interests acquired within the statutory period that the debtor “may not exempt” from the bankruptcy estate. “Value” as used in § 522(p)(l) refers to the economic value of the property interests acquired within the statutory period, not the value of the exemption claimed by the debtor.
Although we decline to address whether the equity definition of “interest” is correct, we concur with the
Reinhard
court’s conclusion that the debtor must acquire vested economic interests
in the homestead property
during the 1,215-day period. A debtor acquires an interest in property, not in an exemption.
See Owen,
For purposes of federal bankruptcy law, the homestead exemption is not a separate interest, but rather the status of a withdrawn interest in property that was acquired prior to bankruptcy.
See Norris v. Thomas,
Our own precedent has recognized that a homestead interest is a legal right vested in the individual to attach an exempt status to existing property interests.
See Perry v. Dearing (In re Perry),
Although the Texas Supreme Court has characterized the homestead interest as “an estate in land” that is “analogous to a life tenancy,” this language merely describes the scope of the protective legal security afforded by the homestead interest.
See Laster,
Thus, we find that the Greene court construed the scope of the term “interest” too broadly. What must be acquired during the statutory period is vested economic interests in the homestead property.
7. Other sections of 11 U.S.C. § 522 indicate that the term “interest” refers to a vested economic interest in property.
“The starting point in discerning congressional intent is the existing statutory text.”
Lamie v. United States Trustee,
The statute is not ambiguous as to whether a homestead interest is covered by § 522(p)(l). The term “interest” is used in several sections of 11 U.S.C. § 522 and consistently refers to some vested economic interest in property. For example, § 522(b)(3)(B), which addresses state exemptions, characterizes “an interest as a tenant by the entirety or joint tenant” as an “interest in property.” Section 522(d)(1), which addresses federal exemptions, states that the debtor may exempt her “aggregate interest, not to exceed $20,200 in value, in real property ... that the debtor ... uses as a residence.” Section 522(p)(2)(B) states that “any amount of interest” does not include any interest transferred from a debtor’s previous principal residence that was acquired outside the statutory period. In contrast to “interests,” which refer to vested economic interests in property, “exemptions” refer to those interests that are withdrawn from the estate. See 11 U.S.C. § 522(b)(1) (“[A]n individual debtor may exempt from property of the estate the property listed in either paragraph (2) [federal exemptions] or, in the alternative, paragraph (3) [state exemptions].”). Section 522(p)(l) prevents the debtor from withdrawing certain vested economic interests in property from the bankruptcy estate if they were acquired by the debtor during the statutory period and their aggregate value exceeds a certain dollar threshold.
8. The legislative history indicates that the term “interest” refers to a vested economic interest in property.
Even assuming that § 522(p)(l) is ambiguous, the legislative history makes clear that the term “interest” refers to some vested economic interest in property acquired during the statutory period, not a homestead interest. “Extrinsic materials have a role in statutory interpretation only to the extent they shed a reliable light on the enacting Legislature’s understanding of otherwise ambiguous terms.”
Exxon Mobil Corp. v. Allapattah Servs., Inc.,
Sec. 322. Limitations on Homestead Exemption. Section 322(a) amends section 522 of the Bankruptcy Code to impose an aggregate monetary limitation of $125,000 ... on the value of property that the debtor may claim as exempt under State or local law pursuant to section 522(b)(3)(A) under certain circumstances. The monetary cap applies if the debtor acquired such property within the 1,215-day period preceding the filing of the petition and the property consists of any of the following: (1) real or personal property of the debtor or that a dependent of the debtor uses as a residence ... (4) real or personal property that the debtor or dependent of the debtor claims as a homestead.... In addition, the limitation does not apply to any interest transferred from a debt- or’s principal residence (which was acquired prior to the beginning of the specified time period) to the debtor’s current principal residence, if both the previous and current residences are located in the same State.
H.R.Rep. No. 109-31(1) (2005),
reprinted in
2005 U.S.C.C.A.N. 88, 148, 2005 WL
*227
832198, *81. This piece of legislative history has been cited approvingly by those courts adopting the title definition of interest.
See, e.g., In re Sainlar,
at
On March 10, 2005, Senator Carper stated the following:
Today, under current law, a wealthy individual in a State such as Florida or Texas can go out, if they are a millionaire, and take those millions of dollars and invest that money in real estate, a huge house, property, and land in the State, file for bankruptcy, and basically protect all of their assets which they own because of a provision in Florida and Texas law.
151 Cong. Rec. S2415-02 (daily ed. March 10, 2005), at *S2415-*S2416.
With the legislation we have before us, someone has to figure out that 2-1/2 years ahead of time people are going to want to file for bankruptcy and be smart enough to put the money into a home, or an estate, or into a trust — not something you can do today — and file for bankruptcy tomorrow; or this year and file for bankruptcy next year or the next 2 or 3 years, or 3-1/2 years.
Id.
at *S2416. Senator Carper’s statement has been cited approvingly by those courts adopting the equity definition of interest.
See, e.g., In re Rasmussen,
Wallace cites to the House Report, which states that “[t]he bill further reduces the opportunity for abuse by requiring a debtor to own the homestead for at least 40 months before he or she can use state exemption law.” Id. at *16. Considering the fact that one “owns” property, not a homestead interest, we do not find this piece of legislative history to be particularly probative of congressional intent.
According to Wallace, BAPCPA was intended to address fraudulent transfers in general, including conversions of non-exempt assets into exempt assets within the statutory period.
Cf. In re Kane,
AFFIRMED.
Notes
. Unlike most other provisions of the statute, 11 U.S.C. § 522(p) became effective immediately upon enactment of BAPCPA on April 20, 2005. See Pub.L. No. 109-8, § 1501(b)(2), 119 Stat. 23, 216 (2005).
. In 2007, the Judicial Conference of the United States adjusted the dollar amount from $125,000 to $136,875. See 72 Fed.Reg. 7082-01 (Feb. 14, 2007); 11 U.S.C. § 104(b). At the time the bankruptcy petition was filed in this case, the relevant dollar amount was $125,000.
. The bankruptcy court decision in Greene was affirmed by the district court in an un~ published opinion, and the case is currently on appeal before the Ninth Circuit.
. In Nevada, the homestead exemption extends to the claimant’s equity in the homestead property up to a maximum of $350,000. Nev.Rev.Stat. § 115.010(2).
.
See In re Anderson,
.
See In re Rasmussen,
. Those courts and commentators adopting the title definition of “interest” have indicated that creditors could challenge fraudulent
*222
mortgage payments or capital improvements made during the statutory period through another BAPCPA provision, 11 U.S.C. § 522(o).
See In re Anderson,
. The date of acquisition of title is irrelevant for purposes of the equity definition; however, if title is acquired during the statutory period, any lump-sum down payment made in connection with closing (i.e. the date of acquisition of title) would apply towards the $125,000 equity cap. In this case, Rogers inherited the Forney Property in 1994, so she did not make a down payment during the statutory period that would apply towards the cap.
. We note the distinction between a homestead interest and a homestead designation. "To establish homestead rights, the claimant must show a combination of both overt acts of homestead usage and the intention on the part of the owner to claim the land as a homestead.”
Dominguez v. Castaneda,
. "Homesteads are protected from forced sale for the payment of debts, except for those debts specifically enumerated in the constitution, including debts incurred for purchase money on the homestead, taxes thereon, work or services performed thereon, certain extensions of credit, and certain reverse mortgages.”
Florey v. Estate of McConnell,