Calif. Politics Could Burn Forgiven Homeowners
If California lawmakers don't settle their differences before April 15, homeowners who received mortgage modifications or lost their home to short sale or foreclosure, will see their 2009 tax bills increase exponentially.
The Associated Press reported yesterday that Governor Arnold Schwarzenegger has threatened to veto a bill that would extend 2009 state tax relief to forgiven homeowners. Previously, California had been in line with temporary federal tax relief laws that don't require the forgiven loan amount to be reported as income.
Schwarzenegger's opposition has nothing to do with mortgages; the "governator" sided with business groups that have complained about a separate provision in the bill that addresses penalties for tax fraud. He has asked lawmakers to quickly draft a separate bill to shore up mortgages, but the AP reports the Democrat-controlled Assembly and Senate isn't budging.
According to the Irvine, Calif.-based RealtyTrac, one in every 195 housing units in the Golden State received a foreclosure filing last month, the fourth highest rate in the nation. During the height of the mortgage boom in 2007, California's median home price rose above $500,000.