This just arrived from Sen. Mike Machado's office in the state Capitol, announcing passage of his SB 1055.
The bill gives state tax relief to Californians who do a short sale (sell for less than they owe on the house) or get a deal from the lender that forgives part of the mortgage.
This bill is a California state tax version of what Congress passed late last year, a bill signed quickly by President Bush.
Usually, federal and state taxing agencies consider forgiven debt as additional income and tax it accordingly. (in slang it's called being "1099'd"). These new bills let taxpayers off the hook, at least temporarily until the housing crisis lets up.
Machado's bill is on its way to the governor's desk for signing or veto.
Machado is a democrat from San Joaquin County, heart of the housing crisis and foreclosure capital of the world. He also chairs the state Senate finance, banking and insurance committee.
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