California Says: No More State Taxes on Forgiven Debt!

As the market shows, many homes are being sold as either short sale or foreclosure properties, and as of yesterday California passed a law in which troubled homeowners don’t have to pay California state income taxes on debt that was forgiven in a short sale, foreclosure, or loan modification.

What is it?

The new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

For debt forgiven on a loan secured by a “qualified principal residence,” (debt in acquiring, constructing, or substantially improving a residence) borrowers will be exempt from both federal and state income tax consequences.

Who does it Cover?

Debt forgiven in a short sale, foreclosure, or loan modification discharged from 2009 to 2012. For those homeowners who already filled their 2009 taxes, there is a exemption Form 540X amendment that can still be mailed in.

It includes first and second trusts deeds.

The Fine Print:

There are many exemptions under which homeowners cannot qualify for these tax breaks, including:

- Second homeowners or rental property investors
- Bankrupt homeowners
- Insolvent taxpayers (but may still be exempt under other provisions)

For more information regarding the above information and addition exemptions, visit http://www.ftb.ca.gov/aboutFTB/newsroom/Mortgage_Debt_Relief_Law.shtml or http://www.irs.gov/individuals/article/0,,id=179414,00.html.

*This is our paraphrasing of a recent email from our California Association of Realtors.

Downtown Fullerton Duplex in Historic Area

Its not too late to get a backup offer in on this Downtown Fullerton Bungalow Duplex.

Main house 2 bed w/ yard - will rent for $1600 /mo 2nd house 1 bed w/ yard - will rent for $1250/mo

Mortage payment with 20% down is $1900 + tax & inusrance (approx $500/mo) = $2400

Live in back unit and it leaves you very little mortgage payment after tax savings. Live in front unit and mortgage payment still drastically reduced to only $1150!

Awesome neighborhood on Woods in Historic Downtown Fullerton Area

See more Downtown Fullerton Homes For Sale here or view the homes for sale map here

New Homebuyer Tax Credit For Californians

Assembly Bill 183, the Homebuyer Tax Credit legislation has officially been signed into law! AB 183 provides $200 million in tax credits, half of which is allocated toward first time buyers purchasing existing homes and the other half for first time buyers purchasing new or never occupied homes.


Here's the important dates:

One must purchases a home on and after May 1, 2010, and on or before Dec. 31, 2010
or
One must purchase a home on and after Dec. 31, 2010, and before Aug. 1, 2011, if under contract before Dec. 31, 2010.


How much is the credit?

The credit is the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years.

Catches?

Purchasers must live in the home for at least two years or pay back the credit!

There's never been more incentive than now as it is currently possible for buyers to get a total of $18,000 in tax credits if they get into escrow by the end of the month! We'd love to help you make this happen.

505 Date St - Brea CA - New Room Rental

Sneak peak before it goes on market. 2 bedrroms 1 bath of home partitioned off from rest of house. Very private with private entrance. Great area and super cheap 895 per month. Email for details

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1544 Avolencia Drive Fullerton CA 92835 - Just Listed

Aren't you tired of short sales, REO's, teaser prices, and unresponsive banks? What ever happened to the homes with an owner who had a name, a pulse, who could set a real price, and would give you a real decision!

Its not an urban legend and not something just reserved for those home buying T.V. shows! This 4 Bedroom 3 Bath ranch style home on a big chunk of land in the Golden Hill area is the real deal.

The Specs:

4 Bedroom 3 Baths
2309 sqft floorplan
Custom Rock Pool and Spa
Updated Kitchen with Island, Stainless Steel Appliances, and Granite
Garden with mature citrus and palm trees
Updated Bathrooms
Dual Fireplaces
Living Room and Family Room
Laundry Room
Hobby/Storage Room off Garage

Price Reduced $749,000

VIDEO TOUR

Vital News for FHA Buyers - 3/5/10

We knew this was coming but it's becoming a reality in the very near future. Buyers need to seriously consider these new changes and how they could make delaying a home purchase in 2010 even more expensive.

On the 5th of April, mortgage insurance for FHA loans will increase by half a percent.

Mortgage insurance is financed in the loan so it isn't a huge increase but it will be felt at closing and during the 30 years worth of payments. If you do not want to have to pay for this increase in mortgage insurance, you will need to be under contract before the 5th of April 2010.

We think the change with even bigger implications will happen in a few months when maximum seller credits will be reduced from 6% of the purchase price down to only 3%. For a buyer purchasing a $400,000 house that could be a potential credit reduction from $24,000 down to $12,000. While our area isn't seeing many if any, buyer credits in the 6% range, some of the harder hit areas of the country will find this to be drastic.

Overall our current market for entry level homes is still very strong. Buyers have yet to see the increased inventory that many have hoped for and interest rates have remained low. FHA buyers can expect that the purchasing of homes in the nicer areas of Orange County will be difficult since sellers are still showing a strong favoritism for conventional or all cash buyers. However, FHA buyers who don't have to have the very best deal in the very best neighborhood or the very worst fixer in the very best neighborhood are finding that these low downpayment loans to be a true reality. Bottomline, if your going FHA you probably will have to compromise. If you can't compromise, save more money for a conventional downpayment.