The housing crisis hit California hard over the last few years. With the economy and home values plummeting, many home owners have found themselves in trouble. The good news is that the new Mortgage Relief Act may be a lifesaver for many California residents. With any luck this will be the break that Californians need in order to get back on their feet.
It was recently reported that the California lawmakers have voted to enact the Mortgage Relief Act and not a moment too soon. The US Government led the way with relief legislation and California followed. When the housing crisis happened, California was one of the most badly affected states. It is expected that over one hundred thousand California homeowners will be helped by this new legislation.
What does this act do? Previously, California residents were taxed income tax for any amount that was forgiven on their mortgage by the bank. This applied to mortgage adjustments, foreclosures, and short sales. This was a terrible problem for many homeowners that were already struggling to make ends meet.
According to this act, California homeowners no longer have to claim any amount of debt forgiven by a bank as income. This will be the case through 2012. The limits are up to five hundred thousand dollars and this applies to the primary residence only.
If you have already filed your income tax it is not too late to file a corrected tax return and don't miss out on this new legislation. Simply get an amended return form and submit it. These changes will be applied to your taxes for the year. Check with a tax preparer for details.
California residents have suffered greatly from the housing crisis and economic downswing. The Mortgage Relief Act is exactly what these people need in order to have a chance to get back on their feet. This new legislation may be helpful to you. See the state website for details.