No taxes on Short Sales (California makes new law)
There are already federal laws currently that allow short sellers to NOT be liable for taxes on the debt forgiven. Now California has just signed similar legislation into law.
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®
NO MORE STATE TAX ON FORGIVEN DEBT
"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.
The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
For more information or if you need to do a short sale, please contact me or fill out the form below. I am an experienced short sale agent representing both sellers and buyers in short sale.
All information deemed reliable. Please consult your tax advisor and/or lawyer for more information.
