California Governor Expected to Sign New Legislation to Exempt Folks from Income Tax Obligation on Real Estate Debt Forgiveness

California public policy should favor job creation, economic recovery, and homeowners who have lost their homes in foreclosure or who were required to sell in short sale situations.

 

State lawmakers have passed legislation that will exempt borrowers who lost their homes to foreclosure or short sales after January 1, 2009, or those who got certain types of loan modifications from state taxes.  Governor Schwarzenegger has said he will sign this into law.

 

California SB401 by Sen. Lois Wolk, D-Davis, passed 47-24 in the Assembly and 24-9 in the Senate on April 8, 2010. 
 
The state Franchise Tax Board has said that after the Governor signs this into law, California taxpayers will not have to do anything.  If taxpayer qualifies for federal relief on mortgage debt forgiven, then they will also qualify for state income tax purposes.  California income tax Form 540 starts with federal adjusted gross income, so there will be no adjustment necessary to reflect the state adjusted gross income amount for this issue.

 

Please be careful with this information.  Always consult your qualified income tax professional or certified public accountant to determine your own factual situation and possible eligibility.

 

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Harrison K. Long, Realtor & broker, Explore Group, Coldwell Banker Previews, Irvine, CA.  CA DRE #01410855.  ExploreProperties@gmail.com.  Lawyer - California State Bar Association member #69137.  National Association of Realtors, California Association of Realtors, and Orange County Association of Realtors.  Current Chairperson of Local Government Relations south committee at OCAR.org.  Newport Beach and Irvine area Realtor, broker agent and property information source. 

Always hire an experienced local REALTOR to help you with the sale or purchase of a home.  Make sure you also consult with an income tax professional or certified public accountant to determine facts for your own situation.

Posted via email from Explore OC Homes