Short Sales in California - Schwarzenegger's take

Schwarzenegger says "I'll be back", or rather that the Legislature needs to bring back a new bill that extends Debt forgiveness on Short Sales. As one article put it "foreclosure city" if Californians are made to pay taxes on "phantom income". The Fed has the 2007 Mortgage Debt Relief Act which is good through 2012, so you're good on your Federal taxes if you qualify. But currently some CPA's are recommending people who sold "short" should file an extension on April 15th and hope that Schwarzenegger and the Legislature get it together before the final October deadline when you have to file.

Here's the paragraph from the Schwarzenegger press release letter:
I asked you to send me legislation that protects homeowners from being taxed on “short sales” when they are forced to sell their home for less than they owe on their mortgage. Instead you are sending me a bill that uses these homeowners as leverage to increase tax penalties for businesses. Send me a clean bill that protects homeowners from this tax immediately, and I will sign it.

Apparently the provision Schwarzenegger so detests is one where companies or individuals who file for refunds fraudulently would be penalized if discovered. Gee, sounds onerous. Thanks Governator for holding up a much needed law because an included law irks you.

Also in the press release is his request for an extension of the $10,000 new home tax credit. His belief is new housing should be built which puts construction workers back to work. I don't know much about the rest of the State's real estate markets, but I don't see how California really needs more new homes when so many sit empty due to foreclosure. But California government completely lost at sea.... what else is new?

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