The IRS recently announced it will not tax people who short sell their homes at the full market rate of the property. The State Board of Equalization says California is following suit, which, the agency says, should be welcome relief to struggling homeowners.
“They were going to end up having to declare income for money that was never really there for them,” says Board of Equalization member George Runner. “People are now not going to have to pay taxes on phantom income because of a short sale.”
Earlier this year, a bill that would have extended state tax relief to short selling homeowners stalled in the legislature. Short sales had become an increasingly popular way for home owners, who owe more than their properties are worth, to avoid foreclosure.