I’m tickled pink to report that our California Governor just signed Senate Bill 401. SB 401 provides additional relief to distressed homeowners by eliminating the need for them to suffer tax implications on distressed home sales.
In other words, if you have to short sale your home, if it was foreclosed or you do a deed in lieu (also known as a strategic foreclosure—not that there is such a thing, IMHO), PRIOR you might be taxed by the state for the part of the loan you did not pay back. This was a big thorn in the side of many sellers who really didn’t have many options.
SB 401 aligns quite nicely with the Federal Debt Forgiveness Legislation. Basically, if you live in California, you now are protected against tax implications in the already-stressful event of a distressed property situation. Of course, with all things, there are rules and guidelines. For one thing, the subject property in question must be a principal residence…sorry investors. The caps are quite generous at 2 million buck-a-roos federal and 800K CA…plus debt forgiveness of 500K.
More good news is that this tax debt forgiveness includes both first and second loans (purchase money) taken out from 2009 thru 2012.
Now if you fall into this category and you have already filed your taxes, get the IRS Form 540X so that you can amend your taxes. This could be money back in your pocket, so waste no time!
Please tune into the podcast from this week’s show where I interview Howard Blum, internationally respected economist who gave his very strong opinions on the current status and the future liklihood of the California economy…plus, ALL you need to know about real estate right now: www.InLoveWithSacto.com.
Hope this helps!
original source: www.inlovewithsacto.tv