How do the 2027 tax changes affect San Diego home buyers and sellers? Wider brackets, a $33,200 joint standard deduction and a $20,000 gift exclusion change the math on down payments, itemizing and sale timing in San Diego.
Tax brackets don't usually make real estate headlines. But the numbers the IRS released on November 5 will quietly shape how San Diego buyers and sellers plan their next move in 2027.
If you're thinking about buying, selling or helping a family member get into a home in San Diego County next year, these changes affect your budget, your deductions and possibly your timing.
Here's what changed, and how to use it.
What Changed for 2027
The IRS announced its 2027 inflation adjustments for almost 70 tax provisions. The seven tax rates stay the same, from 10% to 37%. The income thresholds for each bracket moved up.
The changes that matter most for homeowners:
One timing note: these figures apply to 2027 income, on returns filed in 2028. Returns filed this coming spring still use 2026 numbers. Full details are in Revenue Procedure 2026-35.
What It Means for San Diego Buyers
Family help with a down payment just got bigger
For 2027, each person can give up to $20,000 to anyone without it counting toward their taxable gifts. A married couple can give $40,000 to a child, and another $40,000 to that child's spouse.
That's $80,000 toward a down payment in one year, with no gift tax return required for the annual exclusion amount. In a San Diego market where down payments are the biggest hurdle, that's real help. Your lender will want a gift letter and a paper trail, so plan the transfer early.
Slightly more take-home pay
Wider brackets mean a bit more of your income is taxed at lower rates. If your raise only keeps pace with inflation, you won't get bumped into a higher bracket. It's not a windfall, but every bit helps when you're qualifying for a mortgage in Carlsbad, Encinitas or Rancho Santa Fe.
Will you itemize or take the standard deduction?
At $33,200 for joint filers, the standard deduction is a high bar. But at San Diego price points, mortgage interest plus property taxes can clear it. If they do, owning a home may lower your tax bill more than renting. Run your numbers with a CPA before you buy so you know the real monthly cost.
What It Means for San Diego Sellers
The home sale exclusion did not move
Here's the catch most sellers miss. Brackets adjust for inflation every year. The capital gains exclusion on a primary home does not. It's still $250,000 for single filers and $500,000 for married couples, the same since 1997.
If you bought in Del Mar or La Jolla 15 or 20 years ago, your gain may be well past that. Know your number before you list. Your purchase price, plus documented improvements, sets your cost basis. Pull those receipts now.
Timing your sale matters
A close in December 2026 is taxed under 2026 rules. A close in January 2027 falls under the new, wider brackets. For some sellers, a few weeks can shift which year the gain lands in and how it stacks on other income. Talk to your CPA before you set a list date.
Planning to pass the home on?
The estate tax exclusion rises to $15.48 million per person in 2027. Most San Diego families won't owe estate tax. But keeping a home versus selling it during your lifetime can change the tax outcome for your heirs. It's worth a conversation with an estate attorney.
Frequently Asked Questions
Can my parents help with my San Diego down payment without paying gift tax? Yes. In 2027, each parent can give you $20,000 under the annual exclusion, or $40,000 combined. Larger gifts usually just require a gift tax return, not a payment, but confirm with a tax professional.
Did the capital gains exclusion on home sales go up for 2027? No. It remains $250,000 for single filers and $500,000 for married couples. It isn't indexed for inflation, which matters for long-time San Diego owners with large equity.
When do the 2027 tax brackets take effect? They apply to income earned starting January 1, 2027, reported on returns filed in 2028.
Plan Your 2027 Move Now
The best real estate decisions start with the full financial picture, and tax planning is part of it. Pair your CPA's advice with a clear read on San Diego home values, and you'll know exactly where you stand.
Thinking about buying or selling in San Diego County in 2027? Call or text Billie Bourgeois, REALTOR® with Real Broker, for a free home evaluation or a buyer strategy session.
This post is for general information and is not tax or legal advice. Consult a qualified tax professional about your situation.
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