Buying a home in Berkeley, CA as a Canadian student?

Question

Hi all,

I'm applying to graduate school in the San Francisco Bay Area and I'm thinking of buying a house in Berkeley where my boyfriend and I could live and where we could rent out the 2 or 3 other bedrooms.  It would be a buy and hold and we would also be residents.

Does anyone have any advice on where I might gather some info on the tax and immigration implications?  Will I run into trouble if I act as property manager when my student visa would not allow me to work off-campus?  Will I be paying taxes to both California and Canada?  My boyfriend already lives in Berkeley and is American, so he is not an international student as I would be.

I've been using a great "rental income calculator" spreadsheet (care of @Dominika) as I learn about the crazy Toronto market, but I'm wondering what other variables I need to think about as I look into buying property in the US as a foreigner.

Let me know if any of you have similar experience or any advice!

Thanks for all your help here on this forum/site!

Amy

Melanie Narducci · Answer

Hi Amy,

You've gotten some good feedback already:  Rent control in Berkeley, the type of housing stock (smaller homes).  Overall rents are also pretty crazy throughout the Bay Area, so owning may work financially for you.  You can search for Berkeley homes currently on the market at https://melanienarducci.realscout.com/search  to get a good idea of our prices and market.  Some other things you'll need to think about are property taxes, closing costs, and how you want to hold ownership (as an individual, or an LLC type entity).  It is possible for a foreign national to get a mortgage here, and you'll need to get a tax id # from the IRS (of course).  Congrats on getting into Berkeley -- you'll love living here.  Feel free to let me know if you need any help.

Cheers,

Melanie Narducci  415.738.0552

Colleen F. · Answer

When you rent rooms in a home you are living in it is different then if you were to rent the entire house. For instance fair housing laws are not as strict. If your intent is to rent rooms while in grad school and then rent the house when you move on you need to explore both scenarios. In any case make sure you are clear  when you explore the options that your immediate intent is to rent rooms.  You will need to look at local ordinances on how many unrelated people can live in a house in a particular area before buying too.  Also look at the Berkley city web site to see what it says about rental regulation.

For tax info I would look at irs.gov.    Generally if you earn it here the government is going to want their cut.  Since you aren't working but earning money off property you own I don't believe this is prohibited.

Good luck , this is also when I bought my first house it worked well for me although at the time people thought I was crazy. It got tight and we were is central Pa so don't stretch too thin given that area of the country is pricey.

J. Martin · Answer

Hi Amy,

I'm afraid I can't give you any legal or tax advice, but I just wanted to make sure you are aware of the rent control, tenant protections, and general climate regarding landlords in Berkeley. Search online or ask your boyfriend for the details. SFR may be exempt from rent control, but has just cause eviction protections. Be sure to check.

You can check with a legal professional regarding the property management. But I think "work" is generally in regards to compensation for services rendered. No one is paying you a salary or hourly rate to fix your house. And I think there is a distinction between "active" earned income for your work, and "passive" income generated by investments. But I think you do have the right to maintain your house.. Maybe have your boyfriend collect your rent for you if you are worried about crossing any lines.. Can't help with the rest, unfortunately..

Not sure if Berkeley or Toronto is more expensive, but I know they're both up there! I own rental units about 5 miles north of Berkeley, and use redfin.com to search for properties. Good luck!