SB 401 - California
In April 2010, Governor Arnold Schwarzenegger signed California Senate Bill 401. With the signing, mortgage debt forgiveness for the California taxpayer is more aligned with the Federal relief act. According to a press release from the Office of the Governor, the bill extends the law providing mortgage debt forgiveness to homeowners who lost their homes due to declining home prices and could not afford to pay taxes because the mortgage company forgave the remainder of the loan.
Californians who sold their homes as short sales are allowed to exclude from taxable income the amount owed to and forgiven by the mortgage company. The legislation increases the amount of mortgage debt forgiveness, and applies to homeowners who made loan modifications in 2009.
California Senate Bill 401 also assists renewable energy companies establishing financing to build projects in California. Federal economic stimulus grants received through the American Recovery and Reinvestment Act for renewable energy projects are not treated as income for tax purposes.
SB 401 is welcome news to homeowners who are continuing to lose their homes in a market where property values are going south. In July 2010, SFGate.com reported in "Contra Costa still heading south" that average assessed property values are decreasing throughout Contra Costa county from industrial Richmond to high class Danville.
