Thousands of California Sellers May Get Tax Relief
Under the Mortgage Forgiveness Debt Relief Act of 2007, under certain circumstance a home owner who sells a home as a short sale or loses it in foreclosure may have a write off for the forgiveness of debt which results in a 1099.
However, California homeowners who had a short sale or foreclosure in California, were unable to apply a similar deduction to their state taxes, at least until now. The result was that those who were in great need of a tax deduction, were being taxed on forgiven debt, on money they did not actually have in hand.
The bill has passed the California legislature, and Governor Schwarzenegger has said that he will sign the bill which is expected to effect approximately 34,000 Californians.
Are you upside down in your home? Are you facing foreclosure and would like to know your options? Please contact me at 714.319.9751.
We are not CPAs nor accountants and are not offering tax advice. Please discuss this matter with your tax professional to learn if this bill may effect your taxes.