Tax Relief for California Homeowners for Short Sales or Modified Mortgage Loan

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[Best Syndication News] Governor Arnold Schwarzenegger signed new legislation today that will offer more tax relief for California homeowners that have either sold their home via a short sale or if they have underwent modifying their mortgage loans. The new law will help them with mortgage debt relief and help them from paying thousands of dollars in taxes.

Mortgage Debt Forgiveness in the SB401 law will exclude the taxes on the difference of the loan amount that the mortgage company forgave them during a short sale. A short sale will sell for less than the amount that the homeowner is carrying on the mortgage. If the homeowners lenders will allow a short sale, the difference can sometimes be forgiven by the lender. Usually the difference is considered extra income by the government and could be taxable. The SB401 also includes those that have underwent home loan modification in 2009, which may have received mortgage principal forgiveness.

In addition to this the new legislation will also aid in the promotion of renewable energy projects in California by giving tax assistance to businesses to get their projects started. Funds that are received from the Recovery Act for renewable projects would not be treated as income when reporting it on the taxes.

You should always talk with a professional tax accountant for the current laws, including this one when filing your tax returns.

By: N Wilson

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