New Legislation in California Gives Tax Breaks for People in Foreclosures and Short Sales Earlier this year, thousands of struggling Californians received ‘much needed’ good news concerning the volatile state of their state’s frail housing market.
On April 12, 2010. Arnold Schwarzenegger signed a measure to provide tax relief for citizens going through foreclosures or short sales on their homes, that the California State Legislature approved four days prior. The bill, SB 401 by Sen. Lois Wolk, was passed in time for the April 15 deadline to file tax returns and brings state tax policy in line with federal legislation, specifically the Mortgage Forgiveness Debt Relief Act of the new legislation, that allows them to exclude income from the elimination of debt through California mortgage restructuring or through debt forgiveness relating to a California foreclosure or California short sale.
During the floor debate on SB 401. Ron Calderon, who coauthored the bill, asserted the importance of the legislation in combating the real estate market crash. The mortgagedebt tax relief provision in this bill will provide financial shelter for tens of thousands of Californians who have lost their hopes and dreams in the housing market crash, and it’s about time we gave these folks a helping hand. The bill will also promote the growth of light green energy projects by providing about