The One Big Beautiful Bill Act (H.R. 1, Public Law 119-21), signed into law on July 4, brings sweeping changes to the U.S. tax code — and San Diego real estate stands to benefit in a big way. Whether you’re a homebuyer in Rancho Santa Fe, an investor in Del Mar, or a developer in La Jolla, this legislation reshapes how you approach property taxes, deductions, and real estate investments in California.
In this article, I break down how the bill impacts buyers, sellers, and investors with examples and insights from the perspective of the San Diego luxury real estate market.
California SALT Deduction: Big Win for Rancho Santa Fe Buyers
What changed:
The cap on State and Local Tax (SALT) deductions was increased from $10,000 to $40,000 for joint filers earning under $500,000.
Why it matters:
With elevated property taxes in Rancho Santa Fe, many homeowners previously exceeded the old cap and were losing out on major deductions. For example, a buyer paying $32,000 in property taxes and $8,000 in California state income tax can now deduct the full $40,000 on their federal return — saving over $10,000 in federal income tax, depending on their bracket.
This is a game-changer for high-end buyers navigating the Rancho Santa Fe real estate market, making luxury homeownership in San Diego even more attractive.
Mortgage Insurance Tax Deduction Restored for Homebuyers
What changed:
Mortgage insurance premiums (PMI or MIP) are now tax-deductible again for buyers putting less than 20% down.
Why it matters:
This helps move-up buyers or first-time buyers entering San Diego’s high-value housing market.
Example:
A couple purchases a $1.8M home with 15% down, paying $5,000/year in PMI. With this deduction, they could save an estimated $1,500–$2,000 annually — offsetting ownership costs.
Bonus Depreciation for Real Estate Investors
What changed:
The bill makes 100% bonus depreciation permanent, allowing investors to write off the full cost of certain improvements in the year they’re made.
Why it matters:
This applies to improvements on income-producing or commercial real estate that begins original use with the taxpayer.
Example:
An investor renovates a $2.2M duplex with $250,000 in upgrades. Under the new law, they can deduct the entire $250,000 this year, reducing taxable rental income and boosting ROI.
Affordable Housing Tax Credits for Developers
What changed:
Expanded Low-Income Housing Tax Credits (LIHTC) provide incentives for mixed-use or affordable housing projects.
Why it matters:
Inland portions of La Jolla, San Marcos, and Olivenhain offer development potential with long-term tax advantages.
Example:
A builder includes 12 affordable units in a 40-unit project. With the expected LIHTC and bonus depreciation, they offset millions in development costs — supporting community needs while maximizing returns.
A New Era of Tax Strategy for San Diego Real Estate
The One Big Beautiful Bill changes the playing field for homebuyers, sellers, and investors in San Diego, particularly in premium markets like Rancho Santa Fe, Del Mar, and La Jolla. From a higher SALT deduction to mortgage insurance tax write-offs and enhanced real estate investment incentives, this legislation offers tools to improve cash flow, reduce liability, and enhance long-term returns.
Jason Barry is a Realtor and partner at Barry Estates in Rancho Santa Fe.