Short Sale in California Is There Debt Forgiveness for the State Income Tax?

by on 24. Nov, 2009 in Homeowner Beware

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Question: What’s gonna happen in a short sale in California in 2009? Is there any extensions on the debt forgiveness for the state tax? We have a 750K loan and a buyer is offering 400K. How much will it cost us? Pls help

Answer: The “Mortgage Forgiveness Debt Relief Act of 2007,” was enacted to provide relief to families hit by the subprime mortgage market. Under California tax law, however, debt forgiven following mortgage foreclosure or renegotiation is considered income for tax purposes and may result in a tax liability for taxpayers on a short sale after Jan. 1, 2009.

I would definitely suggest contacting your tax accountant for more specifics.

One Response to “Short Sale in California Is There Debt Forgiveness for the State Income Tax?”

  1. Short Sale Realtor in Colorado Springs, CO 16. Jun, 2011 at 4:39 pm #

    Interesting post! We are agents oursleves who do Colorado Springs short sales, and the process has certainly gotten easier in the last year or two. It is good that lenders are finially able to process these better.

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