Can Non-U.S. Citizens Own Property in California?

Yes. A non-U.S. citizen can buy, own, inherit, and sell real estate in California.

California does not require property owners to be U.S. citizens, green card holders, or California residents. The legal right to own the property is usually straightforward. The complications are more likely to involve financing, taxes, and estate planning.

Can a Foreigner Buy Property in California?

California law allows a person to acquire, hold, and transfer property regardless of citizenship status.

A non-U.S. citizen may purchase California real estate, receive it as a gift, inherit it, and later sell or transfer it. The buyer does not necessarily need to live in the United States.

Do You Need a Social Security Number?

A Social Security number is not required to legally own property, but the transaction may be more complicated without one.

A foreign buyer may need an Individual Taxpayer Identification Number, or ITIN, for tax returns, rental income, refunds, and other tax paperwork. Banks, lenders, escrow companies, and title companies may also request identification and source-of-funds documents.

Is Financing More Difficult for Foreign Buyers?

A cash purchase may be relatively straightforward. A buyer seeking a mortgage may face additional requirements involving:

• Income verification

• Foreign bank statements

• Credit history

• Immigration status

• A larger down payment

These are lender requirements, not California restrictions on property ownership.

What Taxes May Apply?

Foreign owners remain responsible for property taxes, insurance, maintenance, and other ownership expenses.

If the property is rented, the income may create federal and California tax obligations. When a foreign owner sells U.S. real estate, part of the sale price may also be withheld as a tax prepayment.

A foreign seller should address these issues before escrow closes. Waiting until after the sale can make the process more difficult.

What Happens When the Owner Dies?

Estate planning can be especially important for a nonresident who is not a U.S. citizen.

U.S. real estate is considered a U.S.-situated asset. If a nonresident non-U.S. citizen dies owning more than $60,000 in U.S.-situated assets, the estate may be required to file a federal estate tax return.

That amount is only a filing threshold, not an automatic tax bill. Still, $60,000 is low compared with the value of most California real estate.

Can a Living Trust Help?

A properly prepared living trust may help avoid California probate and make the property easier to manage or transfer after death.

However, avoiding probate is not the same as avoiding estate tax. A revocable living trust does not normally remove the property from the owner’s taxable estate. The citizenship and residency of the trustor, trustee, and beneficiaries may also create additional tax and reporting concerns.

Should You Add a Family Member to the Deed?

Adding a child or family member to the deed may create more problems than it solves.

It may be treated as a gift, give that person an immediate ownership interest, expose the property to that person’s creditors, affect the property’s tax basis, and create reporting requirements.

A deed is not simply a name change. It transfers legal ownership.

What Should Foreign Buyers Check Before Purchasing?

Non-U.S. citizens can own property in California, but they should consider more than the basic ownership rule.

Before purchasing, check:

• How the property will be financed

• How rental income and sale proceeds will be taxed

• How the property will be titled

• What will happen to the property when the owner dies

These issues are easier to address before the purchase than after the property has been bought, sold, or transferred.