Tax relief

Housing Crisis Tax Relief Bill Gets The Ok From Lawmakers In California

It’s official; the Governor has said he intends to sign the Tax Relief Bill into law.  The Tax Relief Bill that the California Legislature just recently passed is a bill that could potentially help numerous homeowners who have been devastated by the housing crisis.  At the end of the day, this bill could save homeowners thousands of dollars in taxes.

The bill will essentially provide relief for homeowners who have received mortgage modifications, lost their homes to foreclosures, or were forced to sale their homes for less than they owed on their mortgages.  In essence, it will prevent the cancelled debt from being treated as taxable income.

Taxes in general are burdensome for people, but the thought of having cancelled debt being treated as taxable income is a nightmare.  An Associate broker in Indian Wells claims, p[eople buying Real Estate in Indian Wells should get help to alleviate tax concerns with sellers in the short-sale market.

If you are buying Real Estate in Palm Springs  this will save people a great deal of money while still allowing them to do short sales in Palm Springs.  They will basically be able to continue doing short sales without being found liable for the difference in the short sale price.

So what does this mean?  Look at it this way; if a homeowner who bought a home for $750,000 and sold if for $500,000 in a short sale, it was believed that the homeowner would be liable for the difference of $250,000 in taxes for forgiveness.  Now, people can say goodbye to the forgiveness and still take advantage of short sales. 

As one can imagine, many were questioning whether they even wanted to mess around with short sales prior to this bill.  No one would want to be responsible for forgiveness when it can potentially be hundreds of thousands of dollars.  Now, Coachella Valley’s market can continue to prosper because of the fact that short sales are a large percentage of why the market is so hot.

Congress originally addressed this problem with the Mortgage Forgiveness Debt Relief Act of 2007.  Although it has taken some time, California law has finally stepped up and conformed to the federal tax change, which will run through 2012. 

Sen. Ron Calderon says it’s finally time to help people who have lost their homes or people who have been looking at an insurmountable state tax bill that is not even within their price range.  He says it “will provide financial shelter for tens of thousands of Californians.”

It was the Assembly and Senate that passed the bill following the removal of a provision regarding tax fraud penalties that had Republican Gov. Arnold Schwarzenegger objecting.  In addition, the bill also said that renewable energy companies receiving grants through the American Recovery and Reinvestment Ac would not be able to report these grants as taxable income. 

Governor Schwarzenegger said he wants to sing the bill to give people who are struggling some relief.  His goal is to assist businesses and homeowners in any way he can and this is one way to do just that.