If I am a foreign national: can I buy property in California?
Have you heard the old saying about “death and taxes?” that is my short response. The foreign buyers usually politely laugh and then they say ‘no’. Hence, I go into a detailed explanation that the beauty of the United States and specifically California is, that you can buy property provide you pay your taxes, hence just like “death” it is a guaranteed occurrence and so is “taxes”. Then they start laughing and understand my point.
This in turn leads us into a detailed discussion how the purchase process works in Los Angeles, CA. In other words the details of paying the buyer’s share of the Escrow Costs and all the other, fees. Then we get into a detailed discussion of the taxes.
Just to give you an idea as to how much money they will be paying approximately in Los Angeles, well the answer is easy, about 1.25% per cent of the Purchase Price will be going every year to the city and state. At the same time, they get briefed ,that if they do not pay the annual taxes, then the City and or the County is going to put a lien on their property. Ultimately if they do not pay the taxes for a long period, then the US government can sell off the property.
So, the short answer is yes, any foreign national can buy property in Los Angeles, CA without any penalties. Now keeping in mind, when they are ready to sell they need to be prepared that they will be subject to US capital gains taxes. Therefore, a foreign national selling, will have to automatically have 10% of the purchase price of the property withheld in Escrow payable to the US Internal Revenue Service.
Now with that said yes you can buy property in the greater Los Angeles area and the only thing you must make sure is, that the government gets their fair share of the taxes.
This in turn makes the wise foreign investor double check their numbers as to what they have planned or anticipated as far as growth as well as exit strategies. Sadly, not everyone gives this detailed answer and some get surprised when it is time for their exit from the United States.
Keeping in mind I have numerous recommendations and suggestions on how to mitigate their tax burden. Of course, with the disclaimer to check with a good Tax Attorney and if they need one I would be happy to recommend one to them.
If you are considering buying or selling a home, a luxury home, luxury investment real estate, luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to contact me at 310.486.1002 (m) or homes@endrebarath.com or visit one of my websites at http://www.endrebarath.com. I am a Pet Friendly Realtor and I contribute a portion of my commission to local animal rescue organizations.
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