I know it’s very confusing with all the different bills and legislation especially when you are under the stress of loosing your home. This article deals with tax forgiveness that was approved last April for the state of California.
With so many bills, it’s important for you to know what bills effect you if you have or had a Short Sale or foreclosure.
Early this year, Governor Schwarzenegger signed SB 401 which was an incredible relief to Short Sale sellers and those homeowners whose homes were taken in foreclosure proceedings.
In this bill, those who received “cancelled debt” due to a Short Sale, Foreclosure, Deed in Lieu or a principal reduction/loan modification got the good news that this shortfall would not be included as income on California income tax.
The state of California aligned itself with the Federal Mortgage Debt Relief Act of 2007. This provision however is ONLY for those properties/homes that are or were owner-occupied at the time of sale or foreclosure. This mortgage relief act runs through 2012.
You will or have been issued a 1099 from each lender on your loans and depending on whether or not it was your primary residence will depend upon whether or not the tax is forgiven. You must declare this amount from the 1099 and not disregard it.
I think it’s wise to get help doing your taxes if you have had a short sale or foreclosure and were issued a 1099 due to inability to pay your home mortgage.
As always make sure you check with your attorney or CPA whether you qualify for the relief offered by the State and by the Federal government.
I continue to hope that as a state who has had terrific unemployment and drastically cut many jobs as well as downsizing hours having had a direct impact on the bottom line of many homeowner’s income that we will see relief for all distressed homeowners. We have many who have suffered during this time and I believe we need to extend a hand to all.
As a Short Sale Realtor ® I see a lot of distressed homeowners who have had a difficult time paying their mortgage and never wanted to loose their homes.
No one enjoys loosing their home or investment property but with these economic times many have little or no choice.
If there was ever a time Sacramento needed help, now is the time…not just a time for some but hopefully, a time for all.
Extend a hand…
Other Short Sale News –