On Monday, the California Legislature passed SB 401 (Wolk), a measure providing tax relief on mortgage debt forgiven in a short sale.  Governor Schwarzenegger is expected to sign the measure once it reaches his desk.  Previously, California homeowners were exempt from owing federal taxes on the forgiven mortgage debt, but still were required to pay California taxes on the so-called “phantom income.” This bill now aligns the state’s tax code with that of the federal government, and, if the governor signs it, will become law in time for people to take advantage of it by the April 15 deadline for filing tax returns.

We’ll keep you posted as we learn more about the passing of this exemption!

Clint and Mindy Cronic, Next Generation Real Estate Services, DRE License #01314114 & 01458166

Phone: 530.227.0345  Email: contactus@sellingredding.com

Web: www.ReddingBlogs.com and www.SellingRedding.com