Call Your Senator NOW! Urge a NO Vote on the SB391 (Recording Tax) and a YES Vote on SB30 (Tax Relief)!!
In a surprise move this week, the Senate Appropriations Committee linked C.A.R SPONSORED bill, SB 30, which provides tax relief to those who are selling a home in a short sale to SB 391, a C.A.R.-opposed bill that creates a recording tax, using a shameful political maneuver to force C.A.R. to support the recording tax. As now linked, SB 30 can only become law if SB 391 becomes law. Once SB 391 is defeated, the link in SB 30 can be removed.
REALTORS® and the public should be OUTRAGED that distressed homeowners are being held hostage by Senate Leadership.
CALL YOUR SENATOR TODAY
Ask him or her to stand with REALTORS® and families and
VOTE NO ON SB 391 (recording tax) and
VOTE YES ON SB 30 (tax relief on debt forgiven in a short sale)!
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Here are detailed background and talking points on both bills.
Background/Talking Points – SB 391
California Association of Realtor (C.A.R.) is OPPOSING SB 391 (DeSaulnier) which imposes a recording TAX to generate funds for affordable housing programs. SB 391 creates a $75 per document recording TAX to fund the affordable housing trust. C.A.R. is opposing this measure because it unfairly adds to the cost of recording real estate documents. C.A.R. is an aggressive advocate for affordable housing, but believes it is bad policy to fund affordable housing at the expense of homeowners who need to record real estate documents. The real issue is that this TAX is imposed only on real estate document recordings.
Affordable housing programs should be funded by the broadest base possible of California’s citizens.
C.A.R. opposed the bill’s predecessor, SB 1220, last year until the bill was amended to exempt recordings that were part of a sales transaction. Afterward, C.A.R. supported the measure, but it was defeated. Don’t be misled by allegations that C.A.R. “changed its position” on SB 391. C.A.R.’s Board of Directors considered SB 391 for the first time in May of this year; prior to that, C.A.R. did not take a position on SB 391. The sponsors were advised of this process well before the bill was introduced. In May, the Board of Directors voted to oppose SB 391.
C.A.R. is opposing SB 391 because:
SB 391 unfairly targets property owners who need to record real estate documents to pay for affordable housing programs. Affordable housing is an issue of broad social concern. While there may be a need for affordable housing funds, it is unfair to require only those individuals recording real estate documents to be the sources of that funding.
SB 391 is a recording TAX. While it may not apply to sale transactions, it still applies anytime a homeowner needs to record a document (e.g., refinancing, transferring into or out of a trust, liens, quit claim deeds, etc.).
SB 391 provides no guidelines; it doesn’t prioritize affordable housing needs and requires little oversight. There is nothing in the bill that specifies how funds should be awarded and it provides little oversight as to the best uses of the funds. While it contains an audit requirement, that requirement doesn’t even kick in until the end of the program’s second year, when $1 billion could have already been distributed. And, it’s “geographic” approach to distributing the funds doesn’t ensure the neediest Californians benefit from the program.
While C.A.R. aggressively supports the creation of homeownership opportunities, SB 391 is clearly not the way to achieve that goal.
Background — SB 30
Short sales have become an increasingly important alternative to foreclosure for distressed homeowners. Federal and state law views the debt forgiven by a lender in a short sale as income. In recent years, C.A.R. and NAR have secured short-term relief in state and federal law that keeps this “phantom” income from being taxed. In early January, the President signed into federal law an extension of mortgage debt tax forgiveness until the end of this year. Because state legislation has not yet passed extending the sunset for state tax purposes many short sale sellers are in limbo: the forgiven debt is not income for federal tax purposes but state law has not yet been passed to conform to federal law making it clear that the forgiven debt is also not income for state tax purposes. SB 30 will provide that much needed tax relief.
C.A.R. is SPONSORING SB 30 because:
Lack of conformity is chilling the market. Failure to act will have a “chilling” effect on the still struggling housing market and risk increasing foreclosures at a time when they are beginning to drop. Distressed homeowners often only have two choices – closing a short sale or allowing their home to be foreclosed upon. If they fear state income tax liability on their short sale, they will opt for foreclosure instead, in order to avoid state tax liability. Foreclosures destabilize communities and are more damaging to housing values than short sales.
Families are stuck in financial limbo. Homeowners currently in short sale negotiations can’t finalize these transactions without potentially incurring state tax liability. Sellers who are involved in short sales or contemplating a short sale need to know now that the debt forgiven is not going to be treated as income for state tax purposes.
It’s the right thing to do. Families forced to make the difficult decision to sell their home as a short sale are already in financial trouble. They simply should not have tax liability on “phantom” income or debt forgiveness, money they’ve never actually received.
Source of content: C.A.R. click on this link: http://www.car.org/?view=ContactUs