Follow Me On Pinterest
The distressed homeowner finally got some slack from the California legislators in the form of Senate Bill 401 which FINALLY aligns California with the Federal Forgiveness Act.
Yes, you heard right! For all those Sacramento home sellers who either lost their homes to Foreclosure or sold their home in a Short Sale, as of Monday, the State of California will not tax you on difference between what you owed on your mortgage and what the house or condo sold for. By the way, this also applies to those homeowners who were approved for loan modifications, too.
This CA tax break applies to debts discharged from 2009 through 2010 for principal residence. There is a cap for this tax relief at $500,000 and owing no more than $800,000. And if you have already filed your 2009 tax return, just use Form 540X Amendment but be sure and read the instructions before filling out 540X.
It’s been a long time coming and it will help so many who have lost their homes due to Foreclosure and Short Sale as well as those who have applied and received loan modifications. When you’re down and out, it seems a little contradictory to expect taxes to be paid on the difference between what was owed on the mortgage and what the home sold for. Just sayin…
As a Sacramento Realtor ®, I think there were probably quite a few home sellers and distressed homeowners that probably never even realized they could owe CA taxes on the difference from their mortgage amount and what the property sold for. Well, this is good news and hopefully gives some relief to many.
However, Shrek represents those current and past real estate homeowners who do NOT qualify for the CA tax relief nor the Federal Forgiveness Act. He’s happy for all of you but GREEN with envy since Second homes and Rental property do not qualify for the tax relief both Federally and State. However, there ARE some exemptions that would be best discussed with your tax consultant, such as bankruptcy etc.
We all dread tax time! I can’t begin to imagine adding to the dreaded April 15th deadline, the fact as a homeowner who lost a house back to the bank I would owe CA taxes on the difference. What a nightmare these folks have been living through!
Now, you can rest well and congratulations!
Click to view Foreclosed homes for sale
