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California tax debt relief rules

Discussion in 'Debt Settlement' started by norman95, Oct 7, 2013.

  1. norman95

    norman95 LoanSafe Member

    we short sold our home last year with approx 800k between short sale amount and loan amount. IRS says debt forgiveness is at $2 mil. for joint. my understanding originally was we were also within forgiveness with Cali. also. My accountant tells me today it's only $500k for joint filing, I did some research tonite and looks like for primary residence it's $800k and $500k for other debts. any confirmation would be great. this forum has been a great resource over the past several years with info to help through these times.
  2. TomEason

    TomEason LoanSafe Guide Staff Member

    norman95

    Thanks for your post. I recommend you either trust your tax person or find a new one.
  3. norman95

    norman95 LoanSafe Member

    I respect your post, but isn't a forum like this here to get additional info., opinions, and experiences of others to help support and educate members ? I do trust my accountant of 25 plus years but many changes going on so got to double check.
  4. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Hello Norman,

    This is exactly what this forum is all about! According to SB 401 (expired 1/1/13) your accountant is correct:

    California provision applies to discharges that occurred in 2007 through 2012, and:


    Taxable years 2009 through 2012:


    • Limits the amount of qualified principal residence indebtedness to $800,000 for taxpayers who file as married/registered domestic partners (RDP) filing jointly, single, head of household, or widow/widower, and to $400,000 for taxpayers who file as married/RDP filing separately.
    • Limits debt relief to $500,000 for taxpayers who file as married/RDP filing jointly, single, head of household, or widow/widower, and to $250,000 for taxpayers who file as married/RDP filing separately.
  5. mightyratz

    mightyratz LoanSafe Member

    For a cancellation of mortgage debt prior to 1/1/13, the total amount of principal residence acquisition indebtedness that may be considered for exclusion is $800,000, assuming your filing status is married filing jointly.

    A google search of "ftb mortgage debt relief" should provide you with the necessary info per FTB's site.
  6. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Thanks mightyratz, the information in my previous post is directly from FTB's website..

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