This new measure waives state taxes on mortgage debt that has been forgiven in a foreclosure or short sale. It applies to debt forgiveness in 2009 through 2012, and brings California into conformity with federal debt relief efforts.

Gov. Arnold Schwarzenegger signed the measure, “SB 401″, which permits married partners to exclude canceled mortgage debt up to $500,000 on their primary residence, $250,000 if an individual.

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