Senator Calderon Proposes Tax Relief Bill for Troubled Borrowers in California

December 04, 2012

Contact: Rocky Rushing                                                                      December 3, 2012

                (916) 651-4030

 

SACRAMENTO – Senator Ron Calderon (D-Montebello) introduced a bill today to shield hundreds of thousands of financially-stressed Californians who are upside down on their mortgages from an unjust and crippling state tax.

The measure, SB 30, will assist borrowers faced with staggering tax bills because they have relinquished their owner-occupied homes through a “short sale.”  A short sale is when a lender agrees to forgive a homeowner of a portion of their mortgage debt when the home is sold for less than the mortgage owed. Beginning January 1, 2013, California’s tax structure will treat the forgiven debt as income, requiring a tax payment on money never received.

Senate Bill 30 would bring the state’s tax law into conformity with federal tax law and relieve the borrower of having to claim as income the forgiven mortgage debt.

Last year there were approximately 90,000 short sales in California. Nearly 500,000 California would be helped with the passage of SBX8 25 through 2012, the year when the bill sunsets.

“It is simply unconscionable for the state to place a greater burden on those who have already weathered the emotional and financial distress of a short sale,” said Senator Calderon.