The California Legislature has approved a measure that will waive state taxes on mortgage debt that was forgiven in a foreclosure or short sale.
The Los Angeles Times reports that Gov. Arnold Schwarzenegger, R-Calif., will sign the measure, which is expected to impact approximately 34,000 residents. The state's Franchise Tax Board estimates that the short-sale provision will cost California approximately $34 million in tax revenue over the next three years. However, the legislation's supporters argue that it will help residents move away from the financial problems that cost them their homes.
‘The mortgage-debt tax relief provision in this bill will provide financial shelter for tens of thousands of Californians who have lost their hopes and dreams in the housing market crash, and it's about time we gave these folks a helping hand,’ says State Sen. Ron Calderon, D-Montebello.
SOURCE: Los Angeles Times