New California Law, SB 401, Signed by the Governor
Governor Arnold Schwarzenegger on Monday, April 12, 2010, signed SB 401 that brings much of the stateâ€™s tax policy in conformity with federal tax law while specifically providing greater tax relief to California homeowners who have sold their homes as short sales,Â lost their homesÂ through foreclosures, or modified their mortgage loans in 2009 through 2012.
This law changes California's specified date of conformity to federal income tax law from January 1, 2005 to January 1, 2009, and generally conforms to numerous changes made to federal income tax law during that four-year period.Â Â Â
Among other things, this law extends through 2012 provisions allowing taxpayers to exclude from income the amount of mortgage debt on their principalÂ residence that has been discharged by a lender after aÂ short sale, foreclosure,Â or loan modification.Â It also increases the amount of debt that can be excluded as income from $250,000 to $500,000.
The FTB has adminstratively decided that the reach-back provisions (bringing state law in general conformity with federal law) will apply immediately; otherwise, the FTB would need to process many amended returns.Â In other words, affected members and their clients may take advantage of the changes to the mortgage tax relief immediately.
Additional details will be forthcoming.
For a copy of the statute, click here.
From: California Association of RealtorsÂ Â 4/12/10