"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012.  Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
 
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions.  Most notably, taxpayers who are bankrupt are exempt from debt relief income tax.  Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage.  The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

 

County Properties, 23 years of brokerage experience, trust and a Member of the local Better Business Bureau! We offer free counseling in real estate regarding; home values and information on options of selling vs. Foreclosure.

If you have equity in your home, we will sell your home and get top dollar in this challenging market at www.CountyProperties.net. If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also and close escrow in 45-60 days or less. Learn more about mortgage relief options and how to take advantage of our FREE REALTOR (R)  CONSULTATION.  or go to www.ShortSaleRealtors4U.com

Please feel free to contact me today for free counseling at (619) 301-0200 visit our website, click www.ShortSaleRealtors4U.com  or www.CountyProperties.net

By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net  and I’ll be happy to follow up and take great care of them.