Buying Property in California for International Families with Students: A Guide for Vietnamese, Chinese, Korean, Japanese Families
California is one of the most popular destinations for international students, attracting families from countries like Vietnam, China, Taiwan, Singapore, South Korea, and Japan. Its world-class universities, cultural diversity, and thriving real estate market make it an appealing choice for families looking to invest in property while supporting their children’s education. However, owning property as an international buyer comes with unique considerations, particularly in terms of tax implications, financing, and long-term planning.
Foreign families can buy property in California for their F-1 student children, regardless of citizenship.
Owning property does not impact the student's F-1 visa status or provide any immigration benefits.
Selling property may trigger FIRPTA withholding tax and capital gains tax, so consulting a tax advisor is essential.
Cash purchases are often preferred due to faster transactions and avoiding the complexities of U.S. mortgages for non-residents.
Benefits of buying include stable housing, potential rental income, cultural connection, and long-term investment in California's appreciating real estate market.
Can International Families Buy Property in California for Their F1 Students?
Yes, families from Vietnam, China, Taiwan, Singapore, South Korea, and Japan can legally purchase property in California, even if their child is on an I-20 F1 visa. The U.S. does not restrict property ownership based on citizenship or visa status. Many families buy homes for their children to live in during their studies, with some choosing to rent out part of the property to generate additional income.
However, it’s crucial to note that property ownership:
Does not impact the student’s visa status.
Does not qualify as an EB-5 investment. Real estate ownership does not meet the criteria for this immigrant investor program, which requires a minimum $800,000 investment in a commercial enterprise that creates at least 10 jobs.
Tax Implications When Selling Property
Owning property in the U.S. comes with tax responsibilities, especially when selling. International families, regardless of origin, should understand the following:
FIRPTA Withholding Tax
Under the Foreign Investment in Real Property Tax Act (FIRPTA):
Non-residents selling U.S. property are subject to a withholding tax of 15% of the sale price (not the profit).
This withholding is to ensure compliance with U.S. tax obligations. If the actual tax liability is lower, the seller can claim a refund when filing a U.S. tax return.
Capital Gains Tax
When selling property, international owners may be liable for capital gains tax on the profit:
Federal Capital Gains Tax Rates: Up to 20%, depending on income.
California State Tax: Up to 13.3%, one of the highest in the U.S.
Tax treaties between the U.S. and countries like China, South Korea, and Japan may help reduce tax burdens, so consulting a tax advisor is crucial.
Cash Purchases vs. Loans
Why Cash Purchases Are Common
For families from countries like Vietnam, China, and Singapore, cash purchases are often preferred due to:
Faster transactions.
Avoiding the complexities of U.S. mortgage approvals for non-residents.
Eliminating ongoing interest payments.
Mortgage Options
Families from countries like South Korea and Japan may explore mortgages offered by U.S. or international banks. While loans are available, they require:
A larger down payment (30%-50%).
Higher interest rates.
Extensive documentation, including proof of foreign income and assets.
Benefits of Buying Property for International Students
Stable Housing in Expensive Markets
Cities like Los Angeles, San Francisco, and Irvine are home to top universities such as UCLA, UC Berkeley, and UC Irvine. Purchasing property provides stable, predictable housing in areas with high rental demand.Rental Income Potential
Renting out extra rooms or units can offset costs, especially in California’s competitive rental market.Cultural Connection
Areas with strong Vietnamese, Chinese, Korean, and Japanese communities (e.g., Orange County, San Jose, Koreatown) provide students with cultural familiarity and support.Long-Term Investment
California real estate tends to appreciate over time. Even after the child completes their education, the property can remain a valuable asset.
Example Calculation for a 3 Bed, 2 Bath House in Westminster (92683)
Assumptions:
2020 Purchase Price: $843,813 (Median housing price for zip 92683 according to Redfin)
2024 Sale Price: $1,100,000 (Median housing price for zip 92683 according to Redfin)
Rooms Rented: 2 rooms out of 3 rooms
Monthly Rent Per Room: $800-$1000.00
Duration of Renting: 4 years (48 months)
Expenses: Estimated at 1% of home value annually (which include property tax) , adjusted for appreciation.
Calculations:
Total Rental Income:
$900 × 2 rooms × 48 months = $86,400
Total Expenses:
$37,595.33 (unchanged from previous calculation).
Gain From Sale (Before Taxes):
$1,100,000 (2024 price) - $843,813 (2020 price) = $256,187
Capital Gains Tax:
Federal Tax: $256,187 × 20% = $51,237.40
California State Tax: $256,187 × 13.3% = $34,081.87
Total Taxes: $51,237.40 + $34,081.87 = $85,319.27
Net Gain From Sale (After Taxes):
$256,187 (gain from sale) - $85,319.27 (capital gains taxes) = $170,867.73
Total Gain (Including Updated Rental Income):
Net gain from sale + total rental income - total expenses =
$170,867.73 + $86,400 - $37,595.33 = $219,681.40
Families may choose to retain the property as a long-term investment, renting it out full-time or using it for personal vacations. Alternatively, they can sell the property and reinvest in another real estate opportunity.
Buying property in California offers international families from Vietnam, China, Taiwan, Singapore, South Korea, and Japan a unique way to support their children and invest in a lucrative market. However, careful planning is essential to ensure financial and legal success.
At Maison By Phan, we’re here to support international families every step of the way. Whether you’re purchasing a home for your child studying abroad, exploring rental opportunities, or investing in California’s thriving real estate market, we’ll help you navigate with confidence. Contact us today to discuss how we can make your real estate goals a reality!
