The Emergency Economic Stabilization Act (EESA) also known as the $700 Billion Federal Bailout plan was enacted on October 3, 2008 and will benefit many San Diego homeowners. This infusion of cash to the lending market will promote the mitigation of foreclosures through loan modifications and slow the inflow of foreclosed or bank owned homes in the market place. The decline in foreclosures will help to stabilize falling home values in San Diego which is being driven by the plethora of San Diego Foreclosures.
One feature of the act that benefits taxpayers directly is that many defaulting homeowners will now be able to keep their homes. Another feature of the bill will extend the tax break to homeowners that lose their homes who had a portion of the debt forgiven. The debt forgiveness on home loans under the Mortgage Forgiveness Debt Relief Act of 2007 will be extended until Dec. 31, 2012.
One feature of the act that benefits taxpayers directly is that many defaulting homeowners will now be able to keep their homes.
California taxpayers recently received similar tax breaks on their California State taxes. On September 25, 2008, California Governor Arnold Schwarzenegger signed Senate Bill 1055 into law to offer similar tax relief for debt forgiveness relating to foreclosures. The bill will cover forgiven mortgage debt discharged in 2007 and 2008 however it may need to be amended in the future to keep pace with the extended Federal date of December 31, 2012. The Federal Maximum of $2,000,000 is significantly higher that the $800,000 limit for California. California also has a maximum income exclusion of $250,000.
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