Mortgage Debt Forgiveness May Be Taxable in California

Released: January 14, 2008

SACRAMENTO - California does not automatically conform to the “Mortgage Forgiveness Debt Relief Act of 2007” signed by the President on December 20, 2007. In order for the provisions of this act to apply to California, the legislature must enact conforming legislation.

The “Mortgage Forgiveness Debt Relief Act of 2007,” was enacted to provide relief to families hit by the subprime mortgage market. Under California tax law, however, debt forgiven following mortgage foreclosure or renegotiation is considered income for tax purposes and may result in a tax liability for taxpayers.

There is pending California legislation, Senate Bill 1055, which will provide modified conformity to provisions of this federal legislation. Introduced by Senators Michael Machado and Lou Correa, the bill would provide that mortgage debt forgiveness is not included in California taxable income.

We will provide further information in the event this legislation is enacted. Taxpayers can check FTB’s Website at under “law and legislation” for updates. Taxpayers who have questions about their accounts can call FTB toll free at (800) 852-5711 Monday through Friday from 7 a.m. to 6 p.m.

Help Us Improve Our Website

Don't include social security numbers or other personal/confidential information.

Thank you for your help.

If you need assistance, contact us.

Oops! Something went wrong.

We appreciate your feedback. Please try again later

Chat with an FTB Representative

You are leaving

We do not control the destination site and cannot accept any responsibility for its contents, links, or offers. Review the site's security and confidentiality statements before using the site.

If you have any issues or technical problems, contact that site for assistance.

Ahora está saliendo de

Nosotros no controlamos el sitio web al que se destina y no podemos aceptar ninguna responsabilidad por su contenido, enlaces, u ofertas. Revise las declaraciones de seguridad y confidencialidad del sitio antes de usar el sitio. Si tiene algún problema en general o técnico, comuníquese con ese sitio para obtener asistencia.

Si tiene algún problema en general o técnico, comuníquese con ese sitio para obtener asistencia.