Personal Income Tax Law: exclusions: real property.
AB 2394
California Bills
20250AB__239498AMD INTRODUCED 2026-02-20 AMENDED_ASSEMBLY 2026-04-20 2025 AB AMD Introduced by Assembly Member Lee LEAD_AUTHOR ASSEMBLY Lee
An act to add and repeal
Section 17152.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. taxation, to take effect immediately, tax levy Personal Income Tax Law: exclusions: real property. The Personal Income Tax Law, in conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income.
This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2032, would exclude from gross income gain received by a qualified taxpayer as a result of the sale or exchange of qualified real property, as defined. The bill would define “qualified taxpayer” to mean an individual who is years of age or older on the date of the sale.
The bill would define “qualified real property” to mean real property satisfying certain conditions, including the requirement that the property was used by the qualified taxpayer as their primary residence, as specified, and that the property is sold to a natural person. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy. MAJORITY NO YES NO YES NO YES NO NO NO NO The people of the State of California do enact as follows:
SECTION
Section 17152.5 is added to the Revenue and Taxation Code , to read: 17152.5. (
a) For taxable years beginning on or after January 1, 2027, and before January 1, 2032, gross income does not include any gain received by a qualified taxpayer as a result of the sale or exchange of qualified real property made during the taxable year. (
b) For purposes of this section, the following
definitions shall apply: (1) “Qualified real property” means real property for which all of the following are true: (
A) The qualified taxpayer has, or the qualified taxpayer or their spouse in the case of spouses filing joint returns have, owned the real property for consecutive years or longer as of the date of the sale of the real property. (
B) The real property is owned entirely by the taxpayer or, in the case of spouses filing joint returns, entirely by the taxpayer and their spouse. (
C) The real property was the primary residence of the qualified taxpayer for at least two of the five years immediately prior to the date of the sale of the real property. (
D) The property is sold to a natural person. (2) “Qualified taxpayer” means an individual who is years of age or older on the date of the sale of the qualified real property. (
c) This
section shall remain operative only until December 1, 2032, and as of that date is repealed.
SEC. 2. For purposes of complying with
Section of the Revenue and Taxation Code, as it relates to
Section 17152.5 of the Revenue and Taxation Code as added by this act, the Legislature finds and declares the following: (
a) The specific goal of the exclusion allowed by
Section 17152.5 of the Revenue and Taxation Code is to encourage more homes that have been off the market for decades to be sold to new owners, unlocking inventory for the market and for younger home buyers. (
b) There is no available data to collect or report with respect to the exclusion.
SEC. 3. This act provides for a tax levy within the meaning of