MARK RALSTON/AFP/Getty Images
Homeowners who do short sales won't owe federal taxes on the forgiven portion of the debt. California may soon follow suit.
Homeowners who do short sales — selling their homes for less than they owe to the bank — got a break when a deal was made in Washington on the fiscal cliff. They won’t owe taxes on the difference between the sale price and the loan debt because the Mortgage Forgiveness Debt Relief Act was extended.
Now California may do the same.
Last December, State Senator Ron Calderon introduced a bill — SB 30 — that would extend mortgage debt forgiveness for Californians on their state taxes. If it passes, it will join the federal tax relief that was already extended by Congress.
The California Association of Realtors (CAR) has put its weight behind passage of Calderon’s bill. The trade group sees the bill as critical to the “continued recovery of California’s housing market.” A shortage of homes for sale in the state is driving up prices.