New Legislation in California Gives Tax Breaks for People in Foreclosures and Short Sales Earlier this year, thousands of struggling Californians received much-needed good news concerning the volatile state of their state's frail housing market.
On April 12, 2010, Gov.
Arnold Schwarzenegger signed a measure to provide tax relief for citizens going through foreclosures or short sales on their homes, which the California State Legislature approved four days prior.
The bill, SB 401 by Sen.
Lois Wolk (D-Davis), was passed in time for the April 15 deadline to file tax returns and brings state tax policy in line with federal legislation, specifically the Mortgage Forgiveness Debt Relief Act of 2007.
As a result of the new legislation, over 30,000 taxpayers are expected to benefit from the tax break, which allows them to exclude income from the elimination of debt through California mortgage restructuring or through debt forgiveness relating to a California foreclosure or California short sale.
During the floor debate on SB 401, Sen.
Ron Calderon (D-Montebello), who co-authored the bill, asserted the importance of the legislation in combating the real estate market crash: "The mortgage-debt tax relief provision in this bill will provide financial shelter for tens of thousands of Californians who have lost their hopes and dreams in the housing market crash, and it's about time we gave these folks a helping hand.
" The bill will also promote the growth of green-energy projects by providing about $60 million in tax assistance to sustainable businesses receiving economic stimulus grants through the federal American Recovery and Reinvestment Act.
These "green credits" are meant to assist companies that are developing new clean energy projects in California.
Under the legislation, Recovery Act grant money used to finance these renewable energy projects will not be considered taxable income.
Among Senate and Assembly members displeased with the California home loan mortgage legislation were most Republicans, who viewed certain parts of the bill as tax increases, even though they did support tax-relief measures.
GOP members disagreed with a provision that will cut back deductions for charitable gifts, as well as provisions that will increase taxes on income earned by dependent minors.
Still, the tax break comes with hopeful enthusiasm from advocates who view the measure as a necessity for providing troubled Californians with financial relief from the state's housing market crash, especially in Southern markets, such as Los Angeles and San Diego.
"It is important that we continue to provide all possible assistance to homeowners who were negatively impacted by the mortgage crisis, and this bill will provide them with necessary mortgage debt relief and protect them from thousands of dollars in unfair taxes," said Gov.
Schwarzenegger.
On April 12, 2010, Gov.
Arnold Schwarzenegger signed a measure to provide tax relief for citizens going through foreclosures or short sales on their homes, which the California State Legislature approved four days prior.
The bill, SB 401 by Sen.
Lois Wolk (D-Davis), was passed in time for the April 15 deadline to file tax returns and brings state tax policy in line with federal legislation, specifically the Mortgage Forgiveness Debt Relief Act of 2007.
As a result of the new legislation, over 30,000 taxpayers are expected to benefit from the tax break, which allows them to exclude income from the elimination of debt through California mortgage restructuring or through debt forgiveness relating to a California foreclosure or California short sale.
During the floor debate on SB 401, Sen.
Ron Calderon (D-Montebello), who co-authored the bill, asserted the importance of the legislation in combating the real estate market crash: "The mortgage-debt tax relief provision in this bill will provide financial shelter for tens of thousands of Californians who have lost their hopes and dreams in the housing market crash, and it's about time we gave these folks a helping hand.
" The bill will also promote the growth of green-energy projects by providing about $60 million in tax assistance to sustainable businesses receiving economic stimulus grants through the federal American Recovery and Reinvestment Act.
These "green credits" are meant to assist companies that are developing new clean energy projects in California.
Under the legislation, Recovery Act grant money used to finance these renewable energy projects will not be considered taxable income.
Among Senate and Assembly members displeased with the California home loan mortgage legislation were most Republicans, who viewed certain parts of the bill as tax increases, even though they did support tax-relief measures.
GOP members disagreed with a provision that will cut back deductions for charitable gifts, as well as provisions that will increase taxes on income earned by dependent minors.
Still, the tax break comes with hopeful enthusiasm from advocates who view the measure as a necessity for providing troubled Californians with financial relief from the state's housing market crash, especially in Southern markets, such as Los Angeles and San Diego.
"It is important that we continue to provide all possible assistance to homeowners who were negatively impacted by the mortgage crisis, and this bill will provide them with necessary mortgage debt relief and protect them from thousands of dollars in unfair taxes," said Gov.
Schwarzenegger.
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