Passing California Assembly June 30, AB 1393 provides protections to California homeowners for debt incurred by a short sale. This bill mirrors the Mortgage Forgiveness Debt Relief Act of 2007 enacted by the Treasury for IRS ruling. AB 1393 moves to Governor Browns desk for signing, which should be approved as the assembly passed this measure 68-0 after passing senate by 33-0.
Here’s the notice from the Honorable Henry T. Perea:
SACRAMENTO – An Assembly Bill (AB) that would extend tax relief on forgiveness of mortgage debt by conforming California law to federal law was passed by the California State Assembly today with bipartisan support.
AB 1393, introduced by Assemblymember Henry T. Perea (D-Fresno), would provide continued state income tax relief to borrowers who have had mortgage debt forgiven by their lender.
“Requiring homeowners to pay income taxes on forgiven debt puts additional financial stress on Californians already struggling to make ends meet. This bill would prevent this undue hardship,” said Assemblymember Perea. “They can’t afford to pay an additional tax on money they never received.”
“AB 1393 will provide much-needed tax relief to California homeowners who were on the brink of losing their homes due to the recent mortgage crisis,” said California Attorney General Kamala D. Harris. “In 2012, my office signed the National Mortgage Settlement, which provided $20 billion in debt reduction and other relief to homeowners. AB 1393 is a critical next step to help hardworking Californians get back on their feet. I applaud Assemblymember Perea for authoring this important piece of legislation.”
In recent years, state and federal law has been amended to prevent “phantom” income from being taxed. In January of last year, the President signed into law an extension of the mortgage debt tax forgiveness for 2013. California has yet to conform for 2013. AB 1393 would provide much-needed state-level tax relief to homeowners facing financial hardship.
AB 1393 now moves to the Governor’s desk for approval.
Any questions, please call 323-999-1822…
Kris Darney
