Governor Calls For California Short Sale And Loan Mod Tax Relief
California State Capital
New California Legislation Would Stop Short Sale, Loan Mod And Foreclosure Tax
Schwarzenegger: “Send Me A Short Sale Tax And Loan Modification Tax Bill” Just Last Week He Vetoed A Bill That Would Have Made Short Sale And Loan Mod Debt Relief Non- Taxable.
Because the bill was vetoed by Gov. Arnold Schwarzenegger, California homeowners who sell short will have to pay taxes on forgiven mortgage debt. He had said he would veto it but they sent it to him anyway, he vetoed the bill because it contained a provision on tax refunds for the state’s largest businesses.
He is now calling on lawmakers to introduce new Legislature and send him a bill to provide tax forgiveness on any mortgage relief prior to the April 15 tax-filing deadline.
The part of the bill that would help homeowners follows the Mortgage Debt Relief Act of 2007 that allows taxpayers to exclude income from the discharge of debt on their principal residence. Under the Federal Act, all debt forgiven through short sales, mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.