“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

If you would like more info on this, please contact me. Thanks!

The other day I met some clients to show them a home in the Santa Clara area. I had previewed it just a few days prior. Well, as luck would have it, the whole family showed up with my buyer, and low and behold, we were thwarted by one of those previously mentioned agents! I was able to get the keys out of the lockbox after 15 minutes of prying the box open with a screwdriver. Success!, or so I thought. The buyer and family waiting patiently, we finally tried the key in the lock, it wouldn’t go in! The keyhole in the front door had been filled in with crazy glue!! Ok, I thought, let’s go around to the back and try the rear door. So…. we all trudge through the side gate and to the back door, I tried the key again, and again, the key won’t go into the lock. Hmmm,. took a look at the lock and low and behold someone had driven small finishing nails into the keyhole, thwarted again!

Needless to say, the home needed a whole lot more work than my clients were willing to take on, and we ended up finding them the “perfect” home just a few days later. I hope that through some of the turmoil of the Real Estate market, we loose some of the unscrupulous agents that don’t adhere to the Code of Ethics that most of us abide by. We, as a profession, need to keep faith instilled in our clients, as well as the general public, that there are very professional agents out there. Happy home hunting!