Short Sale Tax implications update! In this update on short sale tax implications we will address taxes on both on the federal and state level. FEDERAL TAXES: On the Federal level, The Mortgage Forgiveness Debt Relief Act was renewed which 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). STATE TAXES: C.A.R. is sponsoring SB 30 (Calderon, D-Montebello). SB 30 will conform state law to the federal law passed last week. Upon passage of SB 30, the measure will […]
The extension means homeowners now will be excused from paying taxes on forgiven mortgage debt through 2013. The debt relief was set to expire Dec. 31. This is a huge relief for homeowners who currently or intend to sell their home as a short sale or perform mortgage modifications. Without this extension these sellers may have faced tax bills in the tens of thousands of dollars.