This new law could change the way Californians buy, refinance, and invest, making homeownership more financially sustainable.
A new federal tax bill called the "One Big Beautiful Bill Act" was passed on July 4. It has already been signed into law, and we have been seeing significant changes in the housing market that could impact buyers, homeowners, and investors. If you’re planning to buy, refinance, or invest soon, here’s what you need to know:
The mortgage interest deduction is now permanent. You can now permanently deduct mortgage interest on loans up to $750,000. That limit isn’t going up, but the deduction itself is locked in. This provides homebuyers and homeowners with long-term clarity regarding tax planning. For high-cost markets, this can help offset borrowing costs and make homeownership more affordable in the long run.
Premium Mortgage Insurance (PMI) becomes tax-deductible starting in 2026. Premium mortgage insurance (PMI) payments for FHA, VA, and low-down-payment conventional loans will be counted as acquisition interest beginning in 2026. This means if you pay PMI and itemize your taxes, you’ll be able to deduct that amount. It directly reduces taxable income and helps make lower-down-payment loans more attractive.
SALT deductions will increase for most households. The state and local tax (SALT) deduction limit, which has been capped at $10,000, is increasing to $40,000 annually through 2029 for filers with an adjusted gross income (AGI) of under $500,000. This is especially helpful in high-tax states like California, where property and income taxes often exceed the old limit. More people will be able to deduct the full amount they pay—something that hasn’t been possible in years.
"From mortgage deductions to SALT relief, the new bill brings lasting tax benefits to high-cost markets."
Investors see key tax benefits preserved. Rental income continues to qualify for the 20% Qualified Business Income (QBI) deduction, which is now permanent. The 1031 exchange rules also remain unchanged, so you can still defer capital gains when trading one investment property for another. The business interest deduction on real property is also protected. These three points combined keep the tax benefits substantial for real estate investors.
Clean energy tax credits are being rolled back. Federal tax credits for solar, EVs, and green upgrades are being reduced or eliminated. To qualify for existing credits, your project must begin before mid-2026. This could deter some homeowners from eco-upgrades, especially if tax savings were a significant factor in their decision.
The bill has already been signed into law, creating new opportunities for homeowners, buyers, and investors. With permanent deductions, expanded tax savings, and preserved investment benefits, this could influence how people buy, refinance, or build wealth through real estate.
If you’re wondering how these changes might impact your plans, you can call or text me at (562) 316-2915 or email me at [email protected]. I’m here to help you make informed, confident real estate decisions.
