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GOV. BROWN SIGNS BILL TO
STOP TAX ON LOAN MODIFICATIONS
Earlier this week, Gov. Jerry Brown signed AB 1393 (Perea), which extends tax relief on forgiveness of mortgage debt by conforming California law to federal law for the 2013 tax year. C.A.R. supported the bill so that homeowners will not be charged state income tax when they’ve had a mortgage loan modified to reduce the principal. Previously, the forgiven debt created by a reduction in principal (e.g., loan modification) wasn’t subject to federal income tax, but was taxable under state law. AB 1393 will provide much-needed state-level tax relief to homeowners facing financial hardship and is great news for homeowners. More info
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