“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.
The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board’s Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service’s Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.
Latest posts by Renee West (see all)
- This turnkey, Lido Village, Bayfront home features a private 100’ boat slip, one of the largest boat accommodations in Newport Harbor. Contact Renee for your private showing- email@example.com. - April 18, 2019
- European Inspired Villa in Dana Point!Offered at $7,333,333.00. Contact Renee West : firstname.lastname@example.org your exclusive tour around the Dana Point community! - April 15, 2019
- 1813 E Bay Ave, Newport Beach. The most distinctive home located on the Newport Peninsula! Asking $44,995,000. Email email@example.com – your Newport Beach Real Estate Agent. - April 4, 2019