SB 401, enacted into law yesterday, generally aligns California's tax treatment or mortgage relief debt income with federal law. For debt forgiven on a load secured by a "qualified princeple residence" borrowers will now be exempt from both federal and state income tax consequences. This tax break applies to debts discharged from 2009 to 2012.
Here's an interesting note. One of my agents is a tax preparer, and he told me that thid debt forgivness applies only to debt pretainig to the home. If a debtor draws out an equjity loan to buy other things such as cars, has thid debt forgiven through a loan modification, foreclosure or short sale, he is still liable for taxes.
Comments(0)