Senator Lou Correa 34th Senate District
For Immediate Release
February 12, 2010
Contact: John Scribner (916) 651-4034
Correa Presses for Continued Homeowner Tax Protections
SACRAMENTO, CA – State Senator Lou Correa (Orange County) is jointly authoring legislation that would extend relief to California homeowners who continue to be plagued by injustices of a tax on a phantom gain, a taxable event generated by a foreclosure.
In 2008, Senators Correa and Michael Machado authored Senate Bill 1055 (SB 1055) which established California’s conformity to the federal cancellation of debt (COD) income exclusion. This provided state income tax relief to distressed California homeowners who had to terminate mortgage loans for a principal residence due to a short sale or a loan restructure. The tax relief provision of this law expired in January 2009.
According to Realtytrac®, a real estate research firm, 632,573 properties in our state received a foreclosure filing in 2009, creating a severe economic impact on California families. In Orange County alone, 38,576 families faced foreclosure in the same year.
Recently, Senate Bill 25 of the 8th Extraordinary Session (SB 25 8X) was introduced by Senators Correa and Calderon to extend the provisions of the previous measure until January 1, 2013. In addition, this measure would increase the qualifying amount of excluded income from $250,000 to $500,000 (from $125,000 to 250,000 in the case of a married individual filing a separate return).
“You have a family that just lost their home and then the state says you owe taxes on the amount you lost, which makes no economic sense,” said Senator Correa. “The housing and mortgage crisis is not over yet. We need to press harder to make sure that homeowners are not taxed on income that never existed. Senator Calderon and I are working together with our fellow lawmakers to have this bill approved by both houses and by the Governor.”
Senator Lou Correa represents the 34th District, which includes the cities of Anaheim, Buena Park, Fullerton, Garden Grove, Santa Ana, Stanton and Westminster.
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