Code sections

§121: Home sale exclusion

Internal Revenue Code (26 U.S.C.)

Lets you skip tax on up to $250,000 of profit when you sell your main home, or $500,000 if you’re married filing jointly. You generally need to have owned the home and lived in it for at least 2 of the 5 years before the sale, and you can use the exclusion once every 2 years. It doesn’t cover depreciation you took while the home was a rental.

§121(b)(4): Surviving spouse

A surviving spouse can still use the $500,000 married limit if they sell within 2 years of the spouse’s death.

§121(d)(3): Divorce

A spouse who receives the home in a divorce counts the time the other spouse owned it. A spouse who moves out still gets credit for living there while the ex-spouse lives in the home under the divorce or separation agreement.

§121(d)(10): Homes from a 1031 exchange

If you got the home through a 1031 exchange, you have to own it for 5 years before the exclusion applies.

On this site: Capital gains calculator, Capital gains on a home sale

Reg. §1.121-3: Partial exclusion for an early sale

Treasury regulation (26 C.F.R.)

If you sell before meeting the 2-year tests because of a job change, a health reason, or another unforeseen event, you can get part of the exclusion. One safe harbor covers a new job at least 50 miles farther from the home than your old job was.

On this site: Capital gains on a home sale

§1014: Step-up in basis at death

Internal Revenue Code (26 U.S.C.)

When you inherit property, its tax basis is generally reset to its market value on the date of death. Gain that built up during the original owner’s life isn’t taxed to you.

§1014(b)(6): Community property

In community property states, both halves of a married couple’s community property get the new basis when the first spouse dies, not just the half that passed at death.

On this site: Inheriting a home

§1223(9): Holding period for inherited property

Internal Revenue Code (26 U.S.C.)

Inherited property counts as held for more than a year, so a sale gets long-term capital gains rates even if you sell soon after the death.

On this site: Inheriting a home

§1016(a)(2): Basis goes down by depreciation

Internal Revenue Code (26 U.S.C.)

Your basis drops by the depreciation that was “allowed or allowable,” meaning the amount you were entitled to take on a rental even if you never claimed it. That lower basis raises your taxable gain when you sell.

On this site: Cost basis tracker, Tracking your cost basis

Reg. §1.263(a)-3: Improvements versus repairs

Treasury regulation (26 C.F.R.)

Decides whether money you spend on a property is a capital improvement or a repair. Work is an improvement if it betters the property, restores it, or adapts it to a new use. Improvements add to your basis; on a rental, repairs are deducted in the year you pay for them.

On this site: Cost basis tracker, Tracking your cost basis

§1041: Transfers between spouses

Internal Revenue Code (26 U.S.C.)

Transfers between spouses, or between ex-spouses as part of a divorce, are tax-free. The spouse who receives the property also takes over its original basis, so tax on the built-up gain is put off, not erased.

On this site: Divorce and your mortgage

§108: Canceled debt

Internal Revenue Code (26 U.S.C.)

Debt a lender forgives, as in a short sale, is usually taxable income. This section lists the exceptions, such as debt canceled in bankruptcy or while you’re insolvent.

On this site: Divorce and your mortgage

§469: Passive activity loss rules

Internal Revenue Code (26 U.S.C.)

Rental real estate is passive by default, and passive losses can only offset passive income. Losses you can’t use this year carry forward to later years.

§469(i): The $25,000 allowance

If you actively help manage a rental, you can deduct up to $25,000 of rental losses against other income. The allowance phases out between $100,000 and $150,000 of modified adjusted gross income.

§469(c)(7): Real estate professionals (REPS)

If more than half of your working hours, and more than 750 hours, go to real estate businesses you materially participate in, your rentals aren’t automatically passive. If you also materially participate in the rentals, their losses can offset wages and other income.

§469(g): Release at sale

Losses you couldn’t use are released when you sell the whole property to an unrelated buyer in a fully taxable sale. They can then offset any income.

On this site: Rental tax shelter calculator, REPS calculator, Rental property tax basics, Real estate professional status

Temp. Reg. §1.469-1T(e)(3)(ii): When a rental isn’t a “rental activity”

Treasury regulation (26 C.F.R.)

Lists cases where renting out property doesn’t count as a rental activity for the passive loss rules. The best known: if the average guest stays 7 days or less, the property isn’t treated as a rental. That’s the basis of the short-term rental strategy, since losses can then offset other income if you materially participate.

On this site: Rental tax shelter calculator, Short-term rental calculator

Temp. Reg. §1.469-5T: Material participation tests

Treasury regulation (26 C.F.R.)

The seven ways to show you materially participate in an activity. The two most common: more than 500 hours in the activity during the year, or more than 100 hours and at least as many hours as anyone else.

§1.469-5T(f)(3): Spouses

Your spouse’s hours count toward your material participation, even if your spouse doesn’t own the property. They don’t count toward the 750-hour real estate professional test.

On this site: REPS calculator, Real estate professional status

Reg. §1.469-9(g): Grouping all rentals as one

Treasury regulation (26 C.F.R.)

Lets a real estate professional treat all their rentals as a single activity, so material participation hours count across the whole portfolio instead of property by property. You make the election with a statement attached to your return, and it binds later years unless your facts change materially.

On this site: REPS calculator, Real estate professional status

§162: Trade or business expenses

Internal Revenue Code (26 U.S.C.)

The general rule for deducting business expenses. For landlords it comes up as a test: a rental that rises to a “trade or business” under §162 can qualify for the QBI deduction.

On this site: QBI deduction for rentals

§199A: Qualified business income (QBI) deduction

Internal Revenue Code (26 U.S.C.)

Lets owners of pass-through businesses, including qualifying rentals, deduct up to 20% of their qualified business income. It was created in 2017 and made permanent in 2025. IRS Revenue Procedure 2019-38 gives rentals a safe harbor based on 250 hours of rental services a year.

On this site: QBI deduction calculator, QBI deduction for rentals

§280A: Homes you rent and also use

Internal Revenue Code (26 U.S.C.)

Limits deductions for a home you both rent out and use yourself. If you rent it 14 days or fewer a year, the rent is tax-free and you don’t report it. If your own use is more than 14 days or 10% of the rental days, rental expenses can’t create a loss.

On this site: QBI deduction for rentals

§1411: Net investment income tax (NIIT)

Internal Revenue Code (26 U.S.C.)

A 3.8% tax on investment income, including rental profit and capital gains, once modified adjusted gross income is over $200,000 (single) or $250,000 (married filing jointly). Those thresholds aren’t adjusted for inflation.

Reg. §1.1411-4(g)(7): Real estate professional safe harbor

A real estate professional who spends more than 500 hours a year on their rentals can treat the rental income as business income, which keeps it out of this tax.

On this site: Capital gains calculator, REPS calculator

§168: Depreciation schedules

Internal Revenue Code (26 U.S.C.)

Sets how long property takes to depreciate: 27.5 years for a residential rental building, 39 for commercial buildings, and shorter lives for things like appliances (5 years) and land improvements (15 years).

§168(k): Bonus depreciation

Lets you deduct most or all of the cost of shorter-lived property, 20 years or less, in the first year. A 2025 law restored 100% bonus for property bought and placed in service after January 19, 2025. The building itself never qualifies.

On this site: Cost segregation calculator, Rental property tax basics

§179: Expensing equipment

Internal Revenue Code (26 U.S.C.)

Lets a business deduct the cost of equipment, vehicles, and some building improvements in the year they’re placed in service, up to an annual limit, instead of depreciating them over several years. It mostly can’t be used inside residential rentals, because property used for lodging is excluded.

On this site: Mortgages for the self-employed

Reg. §1.168(i)-6: Depreciation after a 1031 exchange

Treasury regulation (26 C.F.R.)

The basis carried over from the property you gave up keeps depreciating on the old schedule. Any extra basis, such as new money you put in, starts a fresh schedule.

On this site: 1031 exchange step by step

§1245: Recapture on personal property

Internal Revenue Code (26 U.S.C.)

Covers depreciable personal property, such as appliances, carpet, and items a cost segregation study moves to 5- or 7-year lives. When you sell, the depreciation you took on it is taxed at ordinary income rates.

On this site: Cost segregation calculator, Rental property tax basics

§1250: Recapture on buildings

Internal Revenue Code (26 U.S.C.)

Covers buildings and other real property. When you sell, the straight-line depreciation you took is taxed at up to 25%, called “unrecaptured §1250 gain.”

§1250(a): Depreciation beyond straight-line

Depreciation above the straight-line amount, such as bonus depreciation on 15-year land improvements, is taxed at ordinary income rates instead.

On this site: Sell vs. rent out calculator, Rental property tax basics

§481(a): Catch-up adjustments

Internal Revenue Code (26 U.S.C.)

When you change an accounting method, such as switching to the right depreciation after missing it for years, the whole difference is taken in the year of the change. You file Form 3115 to do it.

On this site: Tracking your cost basis

§1031: Like-kind exchanges

Internal Revenue Code (26 U.S.C.)

Lets you put off tax when you sell investment or business real estate and buy more, if you follow the timing and reinvestment rules. Since 2018 it only covers real property.

§1031(a)(2): Property held for sale

Property held mainly to sell, such as a flip or a builder’s inventory, doesn’t qualify.

§1031(f): Related parties

If you exchange with a related person, such as a family member, and either of you gets rid of the property within 2 years, the deferral is generally lost.

Reg. §1.1031(k)-1(k): Who can’t hold your money

Your qualified intermediary can’t be a “disqualified person,” such as someone who acted as your agent (your attorney, accountant, or real estate agent) in the past 2 years.

On this site: 1031 exchange calculator, 1031 exchange step by step

§25C: Energy efficient home improvement credit

Internal Revenue Code (26 U.S.C.)

30% of the cost of efficiency upgrades such as insulation, windows, and heat pumps, up to $1,200 a year plus a separate $2,000 for heat pumps. A 2025 law ended it for property placed in service after December 31, 2025.

On this site: Energy credits calculator, Energy tax credits

§25D: Residential clean energy credit

Internal Revenue Code (26 U.S.C.)

30% of the cost of solar panels, solar water heaters, geothermal heat pumps, small wind, and battery storage, with no annual cap. A 2025 law ended it for expenditures made after December 31, 2025.

§25D(c): Carryforward

If the credit is more than the tax you owe, the unused part carries forward to later years.

On this site: Energy credits calculator, Energy tax credits

§30C: EV charger credit

Internal Revenue Code (26 U.S.C.)

30% of the cost of a home EV charger, up to $1,000, if the home is in an eligible low-income or non-urban census tract. A 2025 law ended it for property placed in service after June 30, 2026.

On this site: Energy credits calculator, Energy tax credits

§48E: Business clean electricity credit

Internal Revenue Code (26 U.S.C.)

The business version of the clean energy credit, which covers equipment on a rental instead of your own home. It replaced the older §48 credit for property placed in service after 2024. A 2025 law ends it for solar and wind placed in service after 2027 unless construction began by July 4, 2026.

§48: The older energy credit

The business energy credit that §48E replaced. It still applies to property placed in service before 2025.

On this site: Energy tax credits

12 U.S.C. §2607: RESPA kickback ban

Real Estate Settlement Procedures Act, Section 8

Bans kickbacks and unearned fees for referring settlement business, such as a lender paying someone for sending it borrowers.

On this site: Disclaimer

15 U.S.C. §1601: Truth in Lending Act (TILA)

Truth in Lending Act

Requires lenders to disclose the cost of credit in a standard way, including the APR. The Loan Estimate and Closing Disclosure come from rules under this law and RESPA.

On this site: Disclaimer

15 U.S.C. §1691: Equal Credit Opportunity Act (ECOA)

Equal Credit Opportunity Act

Bars lenders from treating applicants differently because of race, color, religion, national origin, sex, marital status, age, or receiving public assistance. Its detailed rules are in Regulation B.

On this site: Disclaimer

12 U.S.C. §1701j-3: Garn-St Germain due-on-sale rules

Garn-St Germain Depository Institutions Act of 1982

Lets lenders enforce a due-on-sale clause, then lists transfers of a home with fewer than 5 units where they can’t. These include a transfer to a relative after the borrower’s death, to a spouse or children, in a divorce, and into a living trust the borrower stays a beneficiary of.

On this site: Inheriting a home, Divorce and your mortgage

12 C.F.R. §191.5: Due-on-sale exemptions in practice

Federal regulation (12 C.F.R.)

The regulation that carries out Garn-St Germain. It applies the exemptions to loans on a home the borrower lives in, and for most of them the person receiving the home has to live there or plan to.

On this site: Inheriting a home