2026 IRS Gift & Estate Tax Rules: $15 Million Lifetime Exclusion Is Here — What Newport Beach Homeowners Need to Know Now

January 22, 2026
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Big news for 2026.

New for 2026: Congress has increased the federal lifetime gift and estate tax exclusion to $15 million per individual, while the annual gift exclusion remains $19,000. For Newport Beach and Costa Mesa homeowners, these changes create powerful planning opportunities—but only if handled correctly. Here’s what California property owners need to know.

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After months of uncertainty, Congress acted. And the results matter — especially if you own California real estate.

Under newly enacted federal law, the IRS gift and estate tax rules for 2026 just changed in a major way. The lifetime exclusion didn’t shrink. It grew.

If you own property in Newport Beach, Costa Mesa, or coastal Orange County, this update directly affects how — and when — you may want to transfer real estate, plan your estate, or make family gifts.

Let’s break it down. Clearly. Simply. And with real-world context.

The Headline: A $15,000,000 Lifetime Gift & Estate Tax Exclusion for 2026

The One, Big, Beautiful Bill, signed into law on July 4, 2025, fundamentally reshaped federal estate planning.

Beginning January 1, 2026, the federal basic exclusion amount increases to:

$15,000,000 per individual
$30,000,000 per married couple

This amount represents the total value you can transfer during your lifetime or at death — combined — without federal gift or estate tax.

The amendment directly updates Internal Revenue Code §2010(c)(3) and replaces the long-anticipated “sunset” that many families were bracing for.

For coastal California homeowners, this is enormous.

Why This Matters in Newport Beach and Costa Mesa

Real estate values here are different.

A “typical” home in Newport Beach or Eastside Costa Mesa can easily exceed $3–5 million. Trophy properties reach eight figures. Some go far beyond that.

Under the new 2026 rules:

Many families can transfer primary residences
Rental properties
Vacation homes
Or even entire real estate portfolios

…without triggering federal estate tax.

For high-net-worth and multi-property owners, this opens the door to strategic lifetime transfers, trust planning, and carefully structured real estate gifts.

But timing and structure matter — especially in California.

Annual Gift Exclusion for 2026: Still $19,000 Per Person

While the lifetime exclusion increased, the annual gift exclusion remains unchanged.

For tax year 2026, you may gift:

$19,000 per recipient
Per year
Without IRS reporting

This means:

A married couple can gift $38,000 per child, per year
To multiple children
With zero gift tax filings required

Anything above $19,000 simply requires reporting, not taxation — unless you exceed the $15mm lifetime limit.

This distinction is often misunderstood. Reporting does not equal paying tax.

Gift Tax vs. Estate Tax — A Simple Explanation

Think of the lifetime exclusion as one bucket.

Every taxable gift made during life reduces that bucket.
Whatever remains is applied at death.

Example:

You gift $1,000,000 during your lifetime.
Your remaining exclusion becomes $14,000,000.

No tax is due — but tracking matters.

And importantly: the person making the gift pays any tax, not the recipient.

Real Estate Gifting: Powerful — But Not Automatic

Here’s where California adds complexity.

Gifting real estate can trigger:

Loss of step-up in basis
Property tax reassessment under Proposition 19
Capital gains exposure for heirs
Title, trust, and financing issues

In many cases, a poorly structured gift costs families far more in long-term taxes than it saves in estate planning.

That’s why real estate gifts should never be viewed in isolation.
They must be evaluated alongside income tax, property tax, and estate strategy.

This is where coordinated legal, tax, and real estate guidance becomes essential.

What This Means for 2026 Planning

The 2026 rules create opportunity — but only for those who plan intentionally.

This is a moment for:

Reviewing existing trusts
Re-evaluating family transfer strategies
Coordinating lifetime gifts with real estate holdings
Structuring LLCs for confidentiality and control and potential Prop 19 workaround
Balancing estate tax savings against capital gains and property taxes

For California homeowners, what you do matters just as much as when you do it.

Why Clients Work With Lucas Real Estate Group

Helping you buy, sell, hold, and navigate every legal and tax detail along the way.

At Lucas Real Estate Group, in partnership with Coldwell Banker Newport Beach and the Coldwell Banker Global Luxury® program, we provide a tailored, full-service approach for:

Sellers
Buyers
Property owners
Trustees
High-net-worth families

Led by Devin R. Lucas — a REALTOR®, Real Estate Attorney, and Real Estate Broker — our team uniquely integrates market expertise, legal precision, and real estate tax strategy under one roof.

Courtney Lucas, a licensed CPA and REALTOR®, adds financial insight that most brokerages simply cannot offer.

This is not just real estate representation.
It’s real estate strategy.

Our Core Services

Real Estate Sales — Sellers & Buyers

Strategic pricing. High-impact presentation. Global exposure through Coldwell Banker Global Luxury®. Competitive offer strategies in fast-moving markets.

Property Owners & Investors

Full-service property management and concierge “home away” services. Leasing, maintenance, HOA coordination, tax payments, and LLC compliance — handled.

Real Estate Legal & Transactional Support

Trust and estate sales. Out-of-state trustee representation. Family and interspousal transfers. LLC structuring. Custom drafting and review.

High-Profile & Confidential Transactions

Discreet representation using LLCs, confidentiality agreements, and third-party management for privacy-focused clients.

Local Roots, Global Reach

Newport Beach. Eastside Costa Mesa. Corona del Mar. Laguna Beach. Newport Coast. Dover Shores. Lido Isle. Bayshores. Peninsula Point — and beyond.

Lucas Real Estate Group is a 2024 and 2025 Coldwell Banker President’s Circle Award recipient and ranks in the top 1.5% of real estate professionals nationwide.

Sources

Internal Revenue Service, IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments from the One, Big, Beautiful Bill, IRS IR-2025-103 (Oct. 9, 2025). link: http://irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
IRS, What’s New — Estate and Gift Tax. link: https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax
IRS, Frequently Asked Questions on Gift Taxes. link: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-ta x es
Public Law 119-21 (July 4, 2025), amending IRC §2010(c)(3)

Questions or Need Help?

Thinking of selling California real estate? We would love the opportunity to assist.

We provide full-service sales and property management in Newport Beach, Costa Mesa, and surrounding Orange County communities.

email: info@lucas-real-estate.com
call: 949-478-1623

For matters involving family transfers, trusts, private sales, or tax-driven strategies, please schedule a paid one-hour consultation (Zoom, phone, or in-person):
Book a consultation here

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— Devin Lucas

Author Devin R. Lucas is a Real Estate Broker, REALTOR®, and Real Estate Attorney specializing in Newport Beach, Costa Mesa, and coastal Orange County. Courtney Lucas, CPA and REALTOR®, provides expert financial insight alongside real estate services.

Lucas Real Estate offers unmatched expertise in California real estate sales, property management, capital gains strategies, and property tax matters, including Propositions 13, 58, 193, 60, 90, and Proposition 19.

For legal or tax-specific planning, please schedule a paid one-hour confidential consultation via Zoom, phone, or in person.

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