Short Sale taxes
Unfortunately, SB30 in California’s legislature has failed and at this point, short sales in California may be taxed. See below for more information about why this homeowner protection has failed. Sure is unfortunate, that again, politics has gotten in the way of helping homeowners. I guess we’ll continue to wait and watch.
From Inman News:
Californians who were hoping that the state wouldn’t count loan debt forgiven in a short sale as income could be in for a rude surprise at tax time, as the fate of a bill to reinstate the tax break is tied to another bill that’s going nowhere.
There’s no opposition to SB 30, which would save homeowners who engaged a short sale or had debt forgiven in a deed-in-lieu of foreclosure about $50 million in taxes, the Sacramento Bee reports.
But the bill contains a “poison pill” that prevents it from taking effect unless the legislature passes SB 391, a more controversial bill that’s opposed by the California Association of Realtors and other real estate industry groups.
– See more at: http://www.inman.com/wire/california-may-tax-debt-forgiven-in-short-sales-as-income/#sthash.nGnVETVl.dpuf
Contra Costa Short Sales can be complicated, but Catherine Myers is experienced in short sales with all major lenders. This ruling in California does not impact your Federal Mortgage debt forgiveness, only your California state taxes. California may now view the “forgiven” amount as income, as unfortunate as that sounds for distressed homeowners.