Both first-time and move-up buyers got a boost from the State of California as Governor Schwarzenegger signed a bill earmarking $200M to be used as a home buyer credit to purchase a principal residence.
The money will be split between the two groups, and as you would expect, there are rules, guidelines, and restrictions.
Sellers may be getting some good news, too.
Up to now, when your home is lost in foreclosure or if you ask the lender to accept less than you owe (as in a short-sale), that was not the end of your financial troubles.
This amount of the loan that was waived or forgiven comes under the heading of “debt relief” and can be treated (and TAXED!) as ordinary income. This could cause a huge financial burden on those homeowners already pummeled by the Real Estate crisis.
However, in a measure expected to be signed by “The Governator”, the State of California agrees not to levy a tax on this amount, thereby providing some welcome relief to those folks whose dream of home-ownership has turned into a nightmare.
Again, we see how important a healthy Real Estate market is viewed in relation to the economic health of the state and how it continues to be the linch-pin of the recovery.
Let’s hope these measures have the desired effect – to get people into their own home and the previous homeowners back on their feet!
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