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California has enacted the Mortgage Relief Act to help those that may be in danger of foreclosing on their mortgages. The state has extended the Mortgage Debt Act form 2008 and extended it until 2012. It is thought that more than 100,000 home owners will benefit from this mortgage relief. California in particular was hit hard when the housing bubble burst. Before this act those with a mortgage were taxed on the acquired deficit if they were foreclosing, modifying their loan or going through a short sale. This forgiven or cancelled amount needed to be reported on taxes and was part of the taxable income for that year. However with the new act this forgiven portion is no longer taxable. There are guidelines to this new mortgage relief as you can only exclude up to $500,000 or if you have a partner but is filing separately $250,000. This new relief act does not apply to any business properties or a second home. For those individuals that have already filled their taxes you can take advantage of this act by filling out an Amended Individual Income Tax return, of Form 540X. To get as much information as you need on the act you should visit the California franchise tax board website. The act only applies to cancelled or forgiven debt that was used to improve your home, buy a home or build your own home. It also applies to a refinancing you have acquired in relationship to your home. The debt must be secured by your home and is known as qualified principal residence indebtedness. This mortgage relief should be able to help many homeowners as it will dramatically reduce their taxes for the year. This relief will hopefully help those with a mortgage to find a beneficial and common solution to their mortgage issues without resulting in bankruptcy.
The Mortgage Relief Act offers fantastic solutions for anyone in danger of foreclosure on their mortgages. More info now on http://www.nphsrealestate.org
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