In a classic case of dirty politics, the Senate Appropriations Committee is holding SB 30, a bill that provides tax relief to homeowners selling their home in a short sale, hostage contingent on SB 391 becoming law. SB 391 is a tax on homeowners to create a source of funds dedicated to affordable housing. SB 391 would impose a fee of $75 to record every real estate instrument, paper, or notice required or permitted by law to be recorded. Money from this fee would be spent to support affordable housing and administer the program.
What is so ironic is the text of SB 391 explains that the money is needed to make housing more affordable, yet the bill adds to the cost of housing. If our legislators really cared about making housing more affordable they would stop increasing the cost of home ownership. In the last few years, government intervention has increased lending costs, transaction costs, foreclosure costs, building requirements, and building costs, to name just a few.
As the legal hurdles to foreclosures have increased, short sales have become an increasingly important alternative to foreclosure. SB 30 would follow in the footsteps of the federal law signed into law in January that keeps debt forgiven in a short sale from being taxed as income.
A vote on these two bills is likely this week. We urge you to call your senator today and recommend a yes vote on SB 30 and a no vote on SB 391.