Friday, April 9, 2010

Short Sale Tax Relief Pending

On Thursday, April 8, the California Legislature passed SB 401 which could provide homeowners relief from state taxes on mortgage debt that is forgiven in a short sale. Federal tax laws protect homeowners from being taxed on the "phantom income" that occurs when mortgage debt is forgiven. However, they were still subject to California taxes on this "phantom" income.

According to C.A.R., Governor Schwarzenegger is expected to sign the bill before the April 15 tax filing deadline.

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