Year-End Real Estate Tax Moves: What California Homeowners and Investors Should Know Before December 31

As the year winds down, a lot of homeowners and investors start asking the same question: is there anything I should do before December 31? The answer depends on your situation, and the details are tax-specific, so I always loop in a CPA. But there are a handful of topics worth knowing about before you sit down with one.

I'm Diana Galvez, a REALTOR® with HomeSmart Realty Group's Homeverse Team. I'm not a tax professional, so treat this as a conversation starter, not advice. Here's what I bring up most with Long Beach and Southern California clients at this time of year.

1031 Exchanges: The Clock Matters More Than Anything

If you own an investment or business property and want to sell and reinvest without paying capital gains tax right away, a 1031 exchange may be an option. It applies to real property held for investment or business use, not your primary home. The rules are strict on timing. You have 45 calendar days from closing on the property you sold to identify replacement properties in writing, and 180 calendar days to close on one. Weekends and holidays don't extend either deadline, and the funds generally have to go through a qualified intermediary rather than touching your own account.

The year-end angle is that a sale closing in November or December starts both clocks at the holidays, when title, lenders, and sellers can be slower to respond. If you're thinking about an exchange, line up your intermediary and your shortlist of replacement properties before you list, not after.

Selling Your Primary Home: The Exclusion

If you're selling the home you live in, you can generally exclude up to $250,000 of gain as a single filer, or $500,000 if you're married filing jointly, as long as you owned and lived in the home as your main residence for at least two of the previous five years. Those amounts haven't changed in decades, and with Southern California appreciation, more sellers are running into gains above them than ever before. If you're close to the line, a CPA can help you work out your basis, including improvements you've made over the years, before you decide on timing.

Prop 19 for Homeowners 55 and Older

California's Proposition 19 lets homeowners who are 55 or older, severely disabled, or affected by a disaster transfer their existing property tax base to a replacement primary residence anywhere in the state, within two years of selling the original home. This can be used up to three times. If the new home costs more, the tax base is adjusted upward for the difference. For longtime owners in neighborhoods where assessed values are far below market, this can be a significant factor in whether and when to move, so it's worth checking the details with the county assessor or a tax professional.

Deductions: SALT and Mortgage Interest

The federal cap on state and local tax deductions, which includes property taxes, was raised in recent legislation and sits at roughly $40,400 for 2026 for most filers, with a phaseout for higher incomes, and it's scheduled to step back down in 2030. It only helps if you itemize. The mortgage interest deduction remains limited to interest on up to $750,000 of acquisition debt, and that limit is now permanent. Interest on a home equity loan is generally deductible only if the money was used to buy, build, or improve the home. Whether itemizing beats the standard deduction for you is a question for your tax preparer.

For Rental Owners: Depreciation

Rental property owners can depreciate the building over 27.5 years, and recent legislation made 100 percent bonus depreciation permanent for qualifying shorter-lived components, such as certain appliances and fixtures. A cost segregation study is the usual way to identify those components. This can accelerate deductions, but it also affects what you owe when you sell, so it's worth running the numbers with a CPA who works with investors before you buy, not after.

Property Tax Dates in Los Angeles County

If you own property in LA County, the first installment of your secured property tax bill is due November 1 and becomes delinquent after December 10. The second installment is due February 1 and becomes delinquent after April 10. Late payments carry a 10 percent penalty per installment. If you're buying or selling right now, make sure your escrow officer accounts for these dates so nothing slips through the cracks.

Don't Let the Tax Tail Wag the Dog

Closing before December 31 is rarely worth rushing into a deal that doesn't fit. The right move is the one that works for your finances, your timeline, and your goals, with the tax angle as one input and not the whole decision. The best time to talk to a CPA is before you list or write an offer, because by the time you're in escrow, your options are limited.

If you're thinking about selling, buying, or investing before the year ends, I can walk you through the real-estate side and coordinate with your tax professional so the timing works.

You can reach me at (323) 807-4184 or casasbydianag@gmail.com. Let's make sure your year-end move is the right one.

Diana Galvez, REALTOR®
Homeverse Team, HomeSmart Realty Group | DRE #02040313
Serving Long Beach, and the greater Los Angeles & Orange County area

This post is general information, not tax or legal advice. Please consult a licensed CPA or tax attorney about your situation.