LOS ANGELES — In an effort to conform state law to a federal law passed last week that extended mortgage debt forgiveness, the California Association of Realtors is sponsoring Senate Bill 30, so that California homeowners on the brink of foreclosure can get much-needed debt relief.
SB 30 (Calderon, D-Montebello) will for one more year exempt the taxation of mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale or loan modification (including any principal reduction).
“We applaud Senator Ron Calderon for acting so quickly on an issue that’s critical to the housing market,” said CAR President Don Faught. “We urge the California Legislature to also act quickly and pass a measure that will give hope to tens of thousands of California homeowners and provide the vital financial relief they need in order to make important personal financial decisions.”
The previous California exemption lapsed at the end of 2012, so forgiven mortgage debt is considered taxable state income for the time being. Upon passage of SB 30, the measure will be effective retroactive to Jan. 1, 2013.
“The swift passage of SB 30 is critical not only for economically-stressed Californians who have lost their homes through short sales but also for the continued recovery of California’s housing market,” said Calderon. “To heap an insurmountable tax bill on top of the pain and emotional duress of losing a home is unconscionable. I am grateful to the California Association of Realtors for recognizing the importance of SB 30 and providing its sponsorship and full support.”
For more information about CAR’s efforts visit car.org.