IMMIGRATION & REAL ESTATE
How Immigrants and Foreign Investors Can Buy and Sell Property Without Citizenship
Living in the U.S., part of the American dream is to own property. Having a home or business to call your own is an essential part of the experience of living here, but it’s one that citizens can take for granted. But what if you’re not a US citizen? What about your American dream?
There are a lot of misconceptions about this process, so we want to set the record straight. Don’t give up on your goals of being an American property owner. In fact, there are already many immigrants, both documented and undocumented, who are already doing it. According to US Census data and the Migration Policy Institute, there are about 3.4 million undocumented immigrants who own homes in the United States. That’s roughly 31% of the total population of undocumented people. When talking about legal immigrants owning homes and other properties, about 53% of them are homeowners. In fact, during the Great Recession when home purchases dropped for native buyers, it turns out that immigrants were still buying homes at a record pace!
Overall, this data shows that the American dream of property ownership is alive and well. Not only that, but it seems to be getting more and more prevalent as time goes, especially since there is currently, nothing preventing immigrants or foreign nationals from buying homes or commercial property in the United States. This is a huge advantage for those who want to be homeowners or who want to start or expand a business.
When it comes to restrictions, the only area where you may run into trouble is taxes and financing. However, there are steps you can take to make the process relatively smooth and painless.
Because buying property can be such an expensive proposition, most immigrants (or buyers in general) don’t have the funds to purchase it outright. If you can pay for your home or commercial real estate in cash, then you won’t run into any issues. However, when you have to work with a financial institution, things can get a little tricky since you may have an insufficient credit history and you may have to pay a premium on the interest rate for the loan. One of the most significant limitations when trying to get a property loan or a mortgage is that you don’t have a credit history. Since banks and other lenders use this information to assess risk and determine everything from a down payment to your mortgage rate, it can make things more difficult.
Further, immigrants who aren’t US citizens will usually pay more for the loan overall. In many cases, you have to make a substantial down payment (up to 20% or more), and you will pay much more in interest during the life of the loan. One example is an ITIN Loan from Alterra Home Mortgages. Since non-citizens don’t have a social security number, they have to get an Individual Tax ID Number (ITIN) from the IRS. From there, they can secure a loan with a financial institution like Alterra. Remarkably, many undocumented immigrants can get ITINs, meaning that the process is not prohibitive to non-citizens. With this kind of loan, borrowers have to pay 20% up front, and they have a 30-year fixed rate mortgage. Also, the interest rate is about double the average (8% instead of 4%). However, there is no prepayment penalty, which is always a bonus.
On the other side of things, if you are an immigrant and you want to sell your home or business, then you will have to pay larger than normal taxes on it. A program called Foreign Investment in Real Property Tax Act (FIRPTA) is designed to make sure that the IRS collects its taxes from all real estate sales from foreign nationals or non-citizens. The way that FIRPTA works is that the buyer has to send up to 15% of the payment to the IRS directly. However, those who have a green card or are a permanent resident (with or without a social security number) are not usually subject to this tax. Being a non-citizen of the US may not restrict you from buying and selling property, but there are some other things that you should be aware of to ensure that there are no surprises.
Other Considerations: Foreign Investors
Property does not guarantee citizenship. If you are hoping to get a green card or become a citizen, buying a home or commercial real estate will not always make it automatically so. After all, loans have to be repaid, no matter what. If you take out a loan in your name and you leave the country (either voluntarily or involuntarily), it still has to be paid. In many cases, immigrants will have remaining family members continue payments so that they don’t default.
What’s even more surprising is that owners don’t have to be a resident. Many foreign investors can buy properties in the US without any problems. So, regardless of if you are planning on becoming a permanent resident or not, you can still have the property of your dreams. In fact,
did you know that by purchasing or selling real estate in the United States of America it’s possible for a person to earn their US citizenship? Real estate investments are an immigration entryway for people with enough money to obtain an investment or entrepreneurial visa.
Investment and Entrpreneurial Visas
Read more about immigration and how it relates real estate. Find out what an investment visa is and the requirements for getting one. Learn about the EB-5 Program and how it allows certain people to immigrate to the United States. See how the real estate industry can provide an excellent method of immigration for entrepreneurs and investors.
We hope you find this article informative. Feel free to share this post with anyone you know that’s looking to obtain an investment visa. If you have more questions about immigration and real estate, please contact us. Enjoy the article!
What is an Investment Visa?
If a foreign entrepreneur or investor wishes to immigrate to America, they may qualify to do so as part of the Employment Based Fifth (EB-5) Program. The program was established in 1990 in an effort to remove the barrier to entry for international business people wishing to bring their operations to America.
In 1992, Congress expanded the program to include investors in commercial enterprises – not just the entrepreneurs running the business. This “Pilot Immigration Program” allowed foreign-nationals to invest in existing, pre-approved regional centers and gain citizenship in the process. These government-approved regional centersare defined as enterprises that promote the economic growth of America.
What Are The EB-5 Visa Requirements?
The United States Citizenship and Immigrations Services (USCIS) may grant an EB-5 Visa to an individual that meets the following requirements:
- They invest in or create a qualifying commercial enterprise in the United States of America. (and/or)
- They plan to create fulltime and permanent employment for at least ten American workers.
As part of the EB-5 program, a person that meets these requirements may also apply for permanent immigration visas for their immediate family (spouses and unmarried children under 21 years old.)
The USCIS defines valid commercial enterprises as “lawful business” and “for-profit activity” that includes but is not limited to:
- Sole Proprietorships
- Limited Partnerships
- General Partnerships
- Holding Companies
- Joint Ventures
- Business Trusts
- Other Public and Private Entities
If you’re looking to immigrate to the United States as a real-estate investor, you don’t necessarily need to worry about the job creation requirements. You can qualify for citizenship by making the qualified capital investment in a new or existing business.
The minimum capital investment requirements for a person to obtain an EB-5 visa are:
- No less than $1 million dollars in cash, inventory, equipment, tangible property or cash equivalent assets (for general businesses)
- No less than $500,000 for investments to be made in a high-unemployment areas within the United States. These areas are defined as rural and/or a place with an unemployment rate greater than 150% of the nation’s average.
Why Would You Obtain a Real Estate Investment Visa?
Because a foreign-national’s investment in the United States doesn’t need to be solely cash based, purchasing commercial real estate is an excellent qualifying investment. Likewise, purchasing property with the intent to sell can satisfy both the cash investment and entrepreneurial requirements of an EB-5 visa.
If you want to come to America, with your family, and you have the means to invest in a business – or the commercial real estate associated with that business – an EB-5 visa could be the best option for you.
Immigrating to the United States can be a difficult and lengthy process. Because not everyone can meet the requirements for a real estate investment visa, fewer people can take advantage of the EB-5 program.
Both the entrepreneur/investor and the country benefit from EB-5 sponsored immigrations. Immigrants with EB-5 visas bring money and means to stimulate the American economy. The invested party gets to enjoy life in America and make a living as an independent business person and/or investor.
How Can I Get an Investment Visa?
Immigration & Real Estate
While an EB-5 visa isn’t necessarily a visa just for real estate investors, it’s an excellent entry point for anyone looking to move to the United States and start their own business.
Depending on what your goals are (i.e., homeownership, foreign investing, real estate investing, business operations), you will want to understand everything involved in this process and as you can see, the process can be complicated and there are a lot of details that need to be properly addressed. As such, you will want to be sure that everything is done correctly, (the first time) which is why working with a lawyer to go over your paperwork with you.
If you are still deciding which agent you want to work with on your foreign investments, there are several benefits with working with a real estate agent who is also an attorney!
To learn more about the hidden benefits of working with an agent who is also an attorney, please be sure to download our informative guide, “The Hidden Benefits Of Working With An Agent Who Is Also An Attorney.” Having this kind of assistance can help you make the process much easier, and it may save you a lot of trouble in the long run.
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