What does this mean for the distressed taxpayers?
Category: Latest News
Published: Monday, April 26, 2010
A recent bill authored by Senator Lois Wolk, D-Davis, SB 405 passed the State Legislature on Thursday. According to Wolk's chief of staff Craig Reynolds, legislation was approved by a vote of 47 to 24 in assembly and a 24 to 9 vote in the senate, Democrats in favor and Republicans in opposition.
What does this mean for the distressed taxpayers? As a third bill passed to provide relief to taxpayers, this bill will make forgiven mortgage debt exempt from being taxed as income avoiding a state tax. Under current California law, debt that was forgiven on several home loans is consider income and is taxable. The amount of debt forgiven is limited to $500,000.
Who does this apply to? People whose homes were forced to be sold for less than the mortgage value (Short sale) or if their mortgages were reduced in forsake of foreclosure (Loan Modification), should closely consider their eligibility for this legislation. Many CPA's are advising their clients affected by this legislation to file for an extension on their taxes.
According to deputy press secretary Mike Naple, even Arnold Schwarzenegger supports this bill and has planned to sign it. Once this is signed by the governor, it's properties will go into effect immediately and retroactively for the 2009 tax year as well remaining through 2012.
After the state's temporary exemption of tax on forgiven debt expired at the end of 2008, this legislation will hopefully be viewed as a light at the end of the tunnel for some folks in need of it. Supported by the California Chamber of Commerce and the California Taxpayers Association this legislation is a part of the need to reform and rebuild the economic crisis being experienced by those living in California.
Diane Vaughn is an experienced Real Estate Agent with Oak Tree Realty Group. Diane has a vast knowledge of Temecula short sales and Murrieta Short sales, if you should have any questions about your property or may be in need of a short sale please call Diane Vaughn 951-677-1216
