No More Tax Liability On Short Sale Debt

Great news: California homeowners who are forced to sell their homes for less than their mortgage amount are no longer subject to taxation on the forgiven debt at either the Federal or state levels, the California Association of Realtors has announced today. Senate Bill 401 was enacted into law yesterday and covers indebtedness of up to $800,000 and forgiveness of debt up to $500,000 on a California homeowner’s principal residence. It covers both first and second trust deeds as well as refinances that were used to pay off previous loans. It also applies to sellers of second homes and rental properties who have been granted bankruptcy protection, or whose current liabilites exceed their income and are considered insolvent. The new law is retroactive and covers distressed sellers from 2009 until 2012 . Those who qualify and have already filed their 2009 state taxes may file Form 540X to receive the exemption. As always I highly recommend speaking with a tax adviser about the new law. If you or anyone you know is in financial distress, having difficulty meeting  payments or is upside down in their mortgage, I urge you to call me today at 949-374-9091 for a free consultation. I can help.