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California gives mortgage debtors a tax break - Zameen News

California gives mortgage debtors a tax break

March 25, 2008 • news

SACRAMENTO (AP) The state Senate has approved a bill to help California homeowners whose lenders have forgiven part of their mortgage debt.

The bill would end a requirement that homeowners report that part of the loan that was forgiven as income on their tax returns.

Senator Mike Machado, a Democrat from Linden, says the bill would help in cases where there is a short sale, a loan modification or a loan refinance in which part or all of the debt is forgiven.

Paying the taxes can put a big burden on embattled homeowners.

The bill only applies to owner-occupied homes in which the debt is forgiven this year or last. State tax officials say it will help about 8,000 taxpayers.

Senators approved the bill unanimously. It now heads to the Assembly.

CNN [Property News]