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Sold Your Solano Home As A Short Sale Last Year? Calif Tax Relief May Be On The Way
April 6th, 2010 categories: Foreclosures / Short Sales
If you sold your home as part of a short sale last year and have had a hard time sleeping lately due to California’s decision to possibly collect 
taxes on the debt relief your lender provided when you sold your home, that looming nightmare might go away in matter of days.
That’s because, as the Sacramento Bee reported earlier today, California legislators will likely vote later this week on a bill that would reverse that decision and allow short-sellers to enjoy the same tax-free benefits that are currently available on their federal tax return.
Normally, debt forgiveness is considered income and subject to taxation. However, early in the economic meltdown, Congress changed the tax code to provide a waiver for many who had lost their home or been forced to short-sell their home. Those people would have otherwise been hit with a monstrous federal tax bill.
But in late March, Gov. Schwarzenegger vetoed a state bill that would have changed California’s tax code to mirror that federal tax exemption.
The reason that bill was vetoed wasn’t because Schwarzenegger wanted to kick those who in dire financial shape at their weakest moment. Rather, it’s because legislators tried to slide some other tax changes which the governor was dead-set against into the bill.
So the governor vetoed the bill, but at the same time called on state lawmakers to draft a bill that would allow California taxpayers to enjoy the same mortgage debt tax relief features that are in the IRS tax code.
According to the Sacramento Bee article, the senate and the assembly both plan to vote on the new legislation on Thursday so it can be sent to Gov. Schwarzenegger for his signature ahead of the April 15 tax filing deadline.
Assuming that’s what happens, it will certainly come as welcomed news to the thousands of California taxpayers who accepted mortgage debt relief last year.
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MARKET UPDATES
- Housing Inventory Way Up In Most of Solano County
- Monthly Solano Real Estate Report — Feb. ‘10
- Benicia & Vallejo Home Sales Report — Feb. 10
- Monthly Solano Real Estate Report — Jan. ‘10
- Benicia & Vallejo Home Sales Report — Jan . ‘10
- 4th Qtr Solano County Home Sale Statistics
- Benicia & Vallejo Home Sales Report — Dec. ‘09
- Monthly Solano Real Estate Report — Dec. ‘09
- Solano/Benicia-Vallejo Home Sale Report Archives
- See All Archived Market Updates
