Just in time for the tax deadline …
One of the things we were watching for has happened:
The state Legislature yesterday passed a measure that would let short sellers off the hook for the debt the bank forgave in 2009.
Remember, some homeowners who thought they were out scot-free after a short sale have gotten whacked with a surprise: A tax bill from the state. The federal government has excluded forgiven debt from being taxable through 2011, but the state hadn’t — until yesterday.
Unlike the last bill that would’ve relieved the tax burden, Gov. Arnold Schwarzenegger said he’d sign the measure when it reaches his desk.
Here’s more, from today’s LA Times:
The bill would waive state taxes on mortgage debt that has been forgiven in a foreclosure or short sale. It is expected to affect about 34,000 taxpayers. …
The short-sale provision would mean about $34 million less in tax revenue for the state over three years, according to the Franchise Tax Board. …
Schwarzenegger said during a news conference Thursday that he wants to give homeowners and businesses “the relief they need.”
“We want to be helpful in every way we can, so we will sign it,” he said.
— KELLY BENNETT