California offers a vast array of opportunities for real estate investors from around the world. In the San Diego area, for example, investors can participate in new residential and commercial developments, purchase distressed properties with the goal of rehabilitating and selling them, or acquire properties for rental, among many other options.
Investors from outside the United States who are considering properties or ventures in California need to be aware of certain legal requirements they must meet, including federal tax laws that specifically address foreign investors. The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) requires withholding of income tax on sales and other dispositions of property with foreign owners. This includes both individual owners who reside outside the U.S. and foreign corporations. While foreign owners are liable for payment of tax under FIRPTA, the immediate obligation to withhold belongs to the buyer.