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News & Press: Sacramento Report

Legislation Would Reduce Amount of Acquisition Indebtedness Eligible for Tax Deduction

Tuesday, January 21, 2020  
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Assembly Bill 1905 (Chiu) would reduce, for the purpose of tax deductions, the maximum amount of acquisition indebtedness eligible for the deduction . The current limits are $1,000,000, or $500,000 in the case of a married individual filing a separate return. Existing law specifies for these purposes that a qualified residence includes the taxpayer’s principal residence and one other residence selected by the taxpayer.

AB 1905, with respect to taxable years beginning on or after January 1, 2020, and with respect to acquisition indebtedness initially incurred by a taxpayer on or after January 1, 2018, would reduce the amount treated as acquisition indebtedness from $1,000,000, or $500,000 in the case of a married individual filing a separate return, to $750,000 and $375,000, respectively. The bill, for taxable years beginning on or after January 1, 2020, would also disallow the deduction of acquisition indebtedness with respect to a qualified residence of a taxpayer other than the principal residence.

The bill would require the Controller to transfer the increased revenue from the General Fund to the Housing and Homeless Response Fund established by the bill. The moneys in the fund would be used to finance immediate and long-term solutions to homelessness.

California Land Title Association


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