Property tax in California for foreigners (UK guide)

The contents of this article is for informational purposes only and does not constitute legal or tax advice. Decisions related to tax should be made after thorough research, consultation and verification from a qualified financial and legal advisor.

Considering buying a holiday home in California? Maybe it’s a property to rent out for some extra income, or even your permanent home if you’re thinking of moving to the US from the UK.

Whatever your plans, one important thing you’ll need to know about are property taxes in California - and how they apply to foreign nationals. There are quite a few to know about, including both state and federal taxes on buying, selling, owning and renting out property.

We’re here to help, with a rundown of all the main California property taxes you need to know about, including the latest tax rates. We’ll also show you a cost-effective way to pay property tax and other expenses in California from the money services provider Wise - the Wise account. It’s not a bank account but offers some similar features, and your money is safeguarded.

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Do foreigners pay tax in California?

Yes, foreign nationals - including British citizens - do pay tax in California, but it all depends on whether they are classed as resident or non-resident for tax purposes.

The state uses multiple factors to determine whether someone is a tax resident or not. This includes:¹

• Time spent in California vs. time spent abroad
• Where your spouse/partner and children live
• Where your main home is
• Financial and legal connections
• Social and professional ties

It’s known as a ‘sticky state’, as it assumes residency until the individual is able to prove that they’ve truly, permanently left.¹

If you’ve moved to California permanently or you’re classed as a resident for other reasons (such as having property and family there), this means you may have to pay income and other taxes there - and you may also have to pay US taxes on your worldwide income.

Who has to pay property tax in California?

Everyone who buys, sells or owns property in California will probably have to pay property tax.

This includes people classed as non-resident for tax purposes, if they own property and/or earn income from property based in California.

Property taxes in California for foreigners - an overview

If you buy, sell, own or rent out property in California, you’ll need to read up on the different types of property taxes and which ones apply to you.

To help make it a little easier, here’s a handy at-a-glance overview:

Taxes for buying/selling property in California

Real Estate Transfer Tax

When you buy property in the US, the main tax involved is called Real Estate Transfer Tax.

It varies considerably by county in California. It’s typically around $1.10 USD for every $1,000 USD of property value, but each county sets their own rates.²

Some counties such as Los Angeles and San Francisco have tiered rates based on property value, and these can go as high as $27.50 USD for every $1,000 USD.²

This tax is often paid by the seller, but you’ll need to check the customs and rules in the county you’re buying in.

Capital Gains Tax (CGT)

When you sell a property in California, you may need to pay Capital Gains Tax (CGT) on both a state and federal level.

This is paid only on the profit you make, which is the difference between what you paid for the property initially and what you sell it for.

In California, you are exempt from this tax on a state level if you lived in it for 2 of the previous 5 years before you sell it. You also get a $250,000 USD tax-free allowance, so you’ll only be taxed on any gains over this threshold.³

On both a state and federal level, capital gains are taxed just like ordinary income.

State CGT rates range from 1% to 13.3% depending on your income bracket.⁴

Federal CGT is split into short-term capital gains for property sold within a year of purchase, and long-term capital gains for sales after that. Rates for short-term CGT taxes are from 10% to 37% (standard income tax rates), while long-term CGT rates are between 0% and 20%.⁴

If you’re not a tax resident of California, it’s likely that the tax rules in your home country (for example, the UK) will apply.

It’s worth getting specialist tax advice on this, to help you understand your obligations and which country’s tax laws apply to you.

Annual property taxes in California

There are also annual taxes every property owner in California must pay, along with local taxes which vary by county.

Annual property tax

Every property owner in California must pay annual property taxes. These vary by county, but are capped by law at 1%.⁵

On average, property owners in the state pay around 0.71% of the assessed value of their property.⁵

Local taxes

In addition to the annual property tax, there are also a number of smaller local taxes that every California property owner needs to pay. These vary considerably by area in terms of type and rate, but typically add up to around 0.25% of the total assessed property value.⁵

They can include:

• Parcel taxes - these are flat fees charged per ‘parcel’ of property, and the funds go towards local schools, parks, libraries and other civic services
• Mella-Roos taxes - these are special taxes applied to properties within designated districts, where the funds are used to pay for roads, sewers and public amenities
• School bonds - these are temporary taxes used to fund school construction and renovation projects
• Vector control taxes - these are small taxes to fund vector control and mosquito abatement programs
• Lighting and landscape taxes - these are paid by property owners in certain areas to cover local landscaping and lighting costs.

Taxes on rental income in California

If you rent out your property in California, you'll need to pay tax on the income you make - on both a state and federal level.

The rates are the same as for capital gains, which are also taxed as regular income. This means state rates range from 1% to 13.3% depending on your income bracket, and federal rates from 10% to 37%.⁶

Manage your money between the UK and California with Wise

If you own or rent out property abroad while still living in the UK, you’ll need a way to manage your money between currencies. You’ll have bills to pay in California, as well as taxes.

Wise offers a cost-effective solution, with a multi-currency account that lets you manage your money between British pounds (GBP) and US dollars (USD) for low, transparent fees* and mid-market exchange rates.

Plus, you can get a Wise card to spend in USD, whenever you’re next in California. This clever contactless card automatically converts currency at the mid-market rate, only adding a tiny currency conversion fee, whenever you spend, making it easier to cover everyday expenses.

Sign up with Wise for free

Sources used:

Sources last checked 23-Nov-2025