Real Estate Law Changes Taking Effect January 1, 2026
As we enter 2026, significant changes in real estate laws at both the California state and federal level will impact landlords, tenants, brokers, investors, and homeowners. Many of these reforms are aimed at increasing tenant protections and transparency, while others will reshape tax planning for property owners nationwide.
California: New Rental Requirements and Landlord-Tenant Regulations
Stronger Habitability Standards:
Beginning January 1, 2026, California landlords will be required to provide working refrigerators and stoves in nearly all rental units as part of the state’s definition of a “habitable” dwelling. The law (Assembly Bill 628) adds basic kitchen appliances previously treated like amenities to the list of core necessities for rental housing. Landlords must install and maintain these appliances and respond to recall notifications within specified timeframes. (Husch Blackwell)
Internet Service Opt-Out Rights:
Under AB 1414, landlords can no longer require tenants to subscribe to bundled internet services as a condition of tenancy. Starting in 2026, tenants must be permitted to decline such services without penalty. Failure to offer this opt-out right can result in tenants deducting the cost of the unwanted service from their rent, and retaliation for exercising this right is prohibited. (First Tuesday Journal)
Updated Security Deposit Practices:
New rules modernize how security deposits are returned. If a tenant paid their deposit electronically (e.g., through ACH or digital payment platforms), landlords are generally required to return refunds using the same electronic method unless both parties agree otherwise. (Mesa Properties)
Tenant Protections in Evictions:
Legislation like AB 246 focuses on preventing immediate eviction when tenants experience income interruptions due to federal Social Security delays or errors, often allowing time for benefits to be restored before eviction proceedings resume. (Mesa Properties)
Fee Transparency & Lease Terms:
Beginning in 2026, landlords must be clear about all mandatory fees in advertised rent and cannot include surprise charges mid-lease or penalties not disclosed upfront. Some proposals also aim to restrict unfair utility billing practices and hidden lease fees. (Riley | Ersoff LLP)
Disclosure Rules for Real Estate Professionals:
Real estate agents and brokers in California must now disclose when listing photos are digitally altered or generated by AI. These disclosures are intended to increase marketing transparency and protect buyers from misleading visual representations of properties. (Steve Lopez Law)
Federal Real Estate-Related Law Changes (U.S. Wide)
Tax Code Overhaul: “One Big Beautiful Bill Act”
A broad set of federal tax reforms signed into law in 2025, widely known as the One Big Beautiful Bill Act contains provisions that will affect real estate investors, homeowners, and developers in 2026:
- Expanded SALT Deduction Cap: The deduction limit for state and local taxes (SALT) which includes property taxes is temporarily raised far above its former $10,000 ceiling. For 2026, the cap increases over prior years (around ~$40,400, with annual inflation adjustments), allowing many taxpayers in high-tax states to deduct more of their property tax and state income taxes on federal returns if they itemize. (Thomson Reuters Tax)
- Estate and Gift Tax Changes: The federal estate and gift tax exemption is raised to $15 million per individual (roughly $30 million for a married couple), providing expanded opportunities for estate planning involving real property and investment real estate. (First Business Bank)
These changes may influence hold vs. sell decisions, estate planning strategies, and property tax planning for real estate owners across the country.
Why These Changes Matter
For Landlords and Property Managers:
2026 requires adjustments to lease templates, property standards, and payment procedures. Appliance upgrades and compliance with opt-out internet services will have both operational and financial implications.
For Tenants:
New rules provide greater clarity about fees, strengthened eviction protections, and rights around services offered in rental agreements.
For Real Estate Brokers & Sellers:
Marketing and advertising standards now require clear disclosures when photos are digitally edited, helping to reduce misrepresentation in property listings.
For Investors and Homeowners Outside California:
Federal tax law changes, especially the expanded SALT deduction and increased estate exemptions provide temporary but meaningful opportunities to optimize tax liabilities associated with property ownership.
These reforms mark one of the most substantive series of changes in recent years for real estate law and tax policy, particularly in high-tax states like California. Engaging experienced legal and tax professionals now can help property owners and investors anticipate compliance challenges and opportunities in 2026.