The CA State legislature passed a bill on April 8th that will help many CA homeowners who were hurt by the housing crisis to save thousands of dollars in taxes.

The bill helps homeowners who received loan modifications, or who sold their home in a short sale or foreclosure. It prevents the cancelled debt from being treated as taxable income.

Currently, these debts that are forgiven are still considered income and taxed by the state.

The U.S. Congress addressed the problem with the Mortgage Forgiveness Debt Relief Act of 2007. This state action makes CA law conform to the Federal law which runs through 2012.

Governor Schwarznegger said yesterday that he will sign the bill. “We want to give people the relief that they need, and we want to do everything we can for businesses, also for homeowners,” he said.

This entry was posted on Monday, April 19th, 2010 at 11:23 pm and is filed under My Real Estate Blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.