Sacramento, Calif – The Assembly Committee on Revenue and Taxation recently voted against Assemblyman Roger Niello’s (R- Fair Oaks) AB 111, which would have provided much needed tax relief for Californians facing mortgage foreclosure.
Current California tax law includes forgiven debt in a taxpayer’s gross income. AB 111 would have provided an income tax exclusion for canceled mortgage debt. The provision would have been in place through 2012, aligning California tax law with the federal law approved last year.
“AB 111 was based on fairness and common sense. The tax revenues from mortgage foreclosures are windfall gains to the state at the expense of California’s most desperate families. The tax revenue exempted by AB 111 would not have been realized if California weren’t at the very epicenter of the mortgage crisis,” said Assemblyman Niello.
This measure would have increased the incentive for borrowers and lenders to work together to keep families in their homes and would have helped stem the tide of the foreclosure crisis.