AMENDED IN ASSEMBLY APRIL 20, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

98

TAX LEVY

Introduced by Assembly Member Haney

January 20, 2026

An act to add Sections 18031.6 and 24941.6 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

Vote: 2/3   Appropriation: no   Fiscal committee: yes   Local program: no

LEGISLATIVE COUNSEL’S DIGEST

The Personal Income Tax Law and the Corporation Tax Law, in modified conformity with federal income tax laws, exclude the recognition of any gain or loss on the exchange of property held for productive use in a trade or business or for investment, if that property is exchanged solely for property of a like kind that is to be held either for productive use in a trade or business or for investment, unless an exception applies.

This bill would, under both the Personal Income Tax Law and Corporation Tax Law, prohibit the application of the above-described law to gain from the exchange of single-family residential rental real property property, as defined, in this state if the taxpayer owns, as defined, 50 or more single-family residential rental real properties at the time of the sale. The bill would apply to exchanges completed on or after January 1, 2026, for purposes of taxable years commencing on or after January 1, 2026.

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of ⅔ of the membership of each house of the Legislature.

This bill would take effect immediately as a tax levy.

The people of the State of California do enact as follows:

SECTION 1.

Section 18031.6 is added to the Revenue and Taxation Code, to read:

18031.6.

(a) Notwithstanding any other law, Section 1031 of the Internal Revenue Code, relating to exchange of property held for productive use or investment, shall not apply to gain from the exchange of qualified property in this state if the taxpayer owns 50 or more qualified properties at the time the exchange is completed.

(b) For purposes of this section, the following definitions shall apply:

(1) “Owns” includes direct ownership as a named owner of the property or indirect ownership through any partial or full ownership interest in an entity that owns the property.

(2) “Qualified property” means a single-family residential rental real property.

(c) (1) This section shall apply to exchanges completed on or after January 1, 2026, for purposes of taxable years commencing on or after January 1, 2026.

(2) This section shall not apply to an exchange where the property to be disposed of by the taxpayer in the exchange is disposed of by that taxpayer on or before January 1, 2026, or where the property to be received by the taxpayer in the exchange is received by that taxpayer on or before January 1, 2026.

SEC. 2.

Section 24941.6 is added to the Revenue and Taxation Code, to read:

24941.6.

(a) Notwithstanding any other law, Section 1031 of the Internal Revenue Code, relating to exchange of property held for productive use or investment, shall not apply to gain from the exchange of qualified property in this state if the taxpayer owns 50 or more qualified properties at the time the exchange is completed.

(b) For purposes of this section, the following definitions shall apply:

(1) “Owns” includes direct ownership as a named owner of the property or indirect ownership through any partial or full ownership interest in an entity that owns the property.

(2) “Qualified property” means a single-family residential rental real property.

(c) (1) This section shall apply to exchanges completed on or after January 1, 2026, for purposes of taxable years commencing on or after January 1, 2026.

(2) This section shall not apply to an exchange where the property to be disposed of by the taxpayer in the exchange is disposed of by that taxpayer on or before January 1, 2026, or where the property to be received by the taxpayer in the exchange is received by that taxpayer on or before January 1, 2026.

SEC. 3.

This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.