How the 2025 Tax Law Impacts California Homeowners, Buyers & Sellers

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I walk through real-life examples and how it impacts Irvine and Tustin families specifically.

If you’re a homeowner, buyer, or seller in California—especially in high-cost areas like Irvine and Tustin—the newly signed 2025 Tax Reform Act, nicknamed the One Big Beautiful Bill Act, brings major tax changes you need to know. These updates could affect your deductions, planning strategies, and bottom line.

Let’s break it down by category:

✅ For Homeowners: Bigger Deductions, More Stability

1. SALT Deduction Cap Raised to $40,000

Previously capped at $10,000, the State and Local Tax (SALT) deduction now allows up to $40,000 in write-offs per year through 2030. This is a huge win for California homeowners, especially in places like Orange County, where both income and property taxes are high.

2. PMI and Mortgage Interest Deduction

The mortgage interest deduction cap remains at $750,000—but it’s now permanent, creating long-term planning stability. If you bought or refinanced in recent years, this offers real savings.

Also, PMI (Private Mortgage Insurance) premiums remain deductible, helping buyers who put less than 20% down.

3. Permanent Lower Tax Brackets + Standard Deduction

Lower federal income tax brackets are now locked in, as is the standard deduction (~$29,200 for married couples), reducing taxable income for most families.

4. 20% QBI Deduction

If you’re self-employed or own rental property through an LLC, you may qualify for a 20% Qualified Business Income (QBI) deduction—an excellent tool for real estate investors, agents, and small business owners.

🏡 For Homebuyers: Predictability + Bonus Deductions

Thinking of buying in 2025? Here’s what to watch for:

1. Mortgage interest and PMI remain deductible, easing the financial burden of monthly payments.

2. Up to $10,000 in tax deductions for interest on American-made EV loans—a bonus if you’re relocating and purchasing both a home and a new electric car.

3. With stable tax brackets and deductions, lenders can more confidently calculate your DTI (Debt-to-Income) ratio, helping you qualify for a better loan.

As a local Irvine realtor working with families relocating from L.A., the Bay Area, and Texas, I’ve seen firsthand how important financial predictability is in today’s market.

📈 For Sellers & Investors: New Strategies to Build Wealth

1. Bonus Depreciation Extended Through 2029

If you're doing a 1031 exchange or selling a rental property, you can deduct the full cost of qualifying improvements upfront—great for wealth-building and tax deferral.

2. Estate Tax Exemption Increased

The estate and gift tax exemption jumps to $15 million per person. If you’re planning to transfer high-value real estate in communities like Orchard Hills, Hidden Canyon, or Turtle Rock, this creates more flexibility and less future tax burden.

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How the 2025 Tax Law Impacts California Homeowners, Buyers & Sellers

If you’re a homeowner, buyer, or seller in California—especially in high-cost areas like Irvine and Tustin—the newly signed 2025 Tax Reform Act, nicknamed the One Big Beautiful Bill Act, brings major tax changes you need to know. These updates could affect your deductions, planning strategies, and bottom line.

Let’s break it down by category:

✅ For Homeowners: Bigger Deductions, More Stability

1. SALT Deduction Cap Raised to $40,000

Previously capped at $10,000, the State and Local Tax (SALT) deduction now allows up to $40,000 in write-offs per year through 2030. This is a huge win for California homeowners, especially in places like Orange County, where both income and property taxes are high.

2. PMI and Mortgage Interest Deduction

The mortgage interest deduction cap remains at $750,000—but it’s now permanent, creating long-term planning stability. If you bought or refinanced in recent years, this offers real savings.

Also, PMI (Private Mortgage Insurance) premiums remain deductible, helping buyers who put less than 20% down.

3. Permanent Lower Tax Brackets + Standard Deduction

Lower federal income tax brackets are now locked in, as is the standard deduction (~$29,200 for married couples), reducing taxable income for most families.

4. 20% QBI Deduction

If you’re self-employed or own rental property through an LLC, you may qualify for a 20% Qualified Business Income (QBI) deduction—an excellent tool for real estate investors, agents, and small business owners.

🏡 For Homebuyers: Predictability + Bonus Deductions

Thinking of buying in 2025? Here’s what to watch for:

1. Mortgage interest and PMI remain deductible, easing the financial burden of monthly payments.

2. Up to $10,000 in tax deductions for interest on American-made EV loans—a bonus if you’re relocating and purchasing both a home and a new electric car.

3. With stable tax brackets and deductions, lenders can more confidently calculate your DTI (Debt-to-Income) ratio, helping you qualify for a better loan.

As a local Irvine realtor working with families relocating from L.A., the Bay Area, and Texas, I’ve seen firsthand how important financial predictability is in today’s market.

📈 For Sellers & Investors: New Strategies to Build Wealth

1. Bonus Depreciation Extended Through 2029

If you're doing a 1031 exchange or selling a rental property, you can deduct the full cost of qualifying improvements upfront—great for wealth-building and tax deferral.

2. Estate Tax Exemption Increased

The estate and gift tax exemption jumps to $15 million per person. If you’re planning to transfer high-value real estate in communities like Orchard Hills, Hidden Canyon, or Turtle Rock, this creates more flexibility and less future tax burden.

📍 California-Specific Considerations

While these federal tax changes are generous, California remains a high-tax state. Here’s what you need to keep in mind:

1. Proposition 13 is still your strongest protection against rising property taxes. It limits increases unless you sell or do major renovations.

2. If your household income is over $500K, or you're a senior earning over $75K as a single filer, some deductions may phase out—so work with a CPA to evaluate your scenario.

💡 Final Takeaways

Whether you're planning to buy, sell, or stay put in your home, the 2025 Tax Reform Act offers:

1. ✔️ Bigger deductions and permanent rules for homeowners

2. ✔️ Predictable tax brackets and vehicle bonuses for buyers

3. ✔️ Wealth-building incentives for sellers and investors

And if you live in Irvine or Tustin, where property values and taxes are higher than average, these updates could significantly impact your financial strategy.

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Need help understanding how this bill affects your real estate plans?

Let’s talk. I’m Regina Chen, your local expert in Irvine, Tustin, and surrounding Orange County communities—here to help you buy smarter, sell confidently, and build wealth through real estate.