Home Front

A blog about the economy and the Sacramento-area real estate market.

March 25, 2010
State buyer tax credits approved, debt forgiveness stalls

 It's been a whirlwind day in the state Capitol, but it ends with Gov. Arnold Schwarzenegger signing a bill to allocate $200 million for state home buyer tax credits. That's expected to affect 32,000 California home buyers in coming months - and comes just as a federal $8,000 tax credit is about to expire.

But mortgage debt forgiveness will have a wait a bit. It's almost assured that people won't have to pay state taxes on 2009 mortgage debt forgiven in foreclosures, loan modifications and short sales. But Schwarzenegger vetoed a bill that would make it happen - over an unrelated provision in the bill he didn't like.

The Legislature flirted this morning with passing another bill that would provide mortgage debt forgiveness but left town with the mission unaccomplished. Lawmakers will return April 5 and are likely to pass a bill then, just in time for the April 15 tax-filing  deadline.

 This has made a lot of people nervous who are getting their 1099 forms. But it's extremely likely they have little to worry about on this front.

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