Thousands of Californians whose homes were foreclosed on or sold at a
loss will likely get tax relief under a measure approved Thursday by
the state Legislature.
The bill would waive state taxes on mortgage debt that has been
forgiven in a foreclosure or short sale. The law is expected to affect
about 34,000 taxpayers.
Gov. Arnold Schwarzenegger is expected to sign the measure, which
would also provide about $60 million in tax credits to green-energy
companies.
Californians can already claim the tax breaks on federal returns.
With the April 15 deadline for tax filings looming, the Senate and
Assembly approved the measure, SB 401, by Sen. Lois Wolk, D-Davis.
The short-sale provision would mean about $34 million less in tax
revenue for the state over three years, according to the Franchise Tax
Board.
–Patrick McGreevy in Sacramento
Photo: L.A. Times file