Can EB-5 Investors Buy a Home in the U.S. Before Receiving Their Green Card?

For foreign investors looking to move to the United States, the EB-5 Immigrant Investor Program offers a unique pathway to permanent residency. Through this program, applicants invest in a qualifying U.S. new commercial enterprise and, upon meeting certain conditions, can obtain a Green Card.

One common question among potential EB-5 investors is whether they can purchase property in the U.S. before receiving their Green Card. The short answer is yes, but there are a number of legal, financial, and tax implications to consider.

This article provides a detailed breakdown of the key factors to be aware of when purchasing property as an EB-5 applicant.

Can EB-5 Investors Buy Property Before Receiving Their Green Card?

Yes, EB-5 investors are allowed to buy property in the U.S. before receiving their Green Card. The EB-5 program focuses primarily on investment in qualifying U.S. new commercial enterprises rather than property ownership, so there are no restrictions preventing an EB-5 applicant from purchasing real estate.

In fact, many EB-5 investors buy property in the U.S. as part of their long-term plans for residency and business development. Purchasing real estate can provide an additional sense of stability and security while the applicant’s immigration process progresses.

However, while buying property is permitted, it is essential to understand the financial and legal landscape that accompanies such a decision.

Financing Limitations for EB-5 Investors

For non-U.S. citizens and non-permanent residents, obtaining financing for a home purchase in the U.S. can be more challenging. Since the EB-5 investor is still in the process of obtaining a Green Card, they are not considered a permanent resident or a U.S. citizen, which may limit their available financing options.

Here are some key points to consider regarding financing.

Limited Access to Traditional Mortgages

In the U.S., banks and other lenders are not allowed to discriminate on the basis of nationality. However, they are allowed to inquire about your permanent residency or immigration status and consider it while determining your repayment ability.

For example, in order to qualify for a mortgage loan, among other things, you’ll need a stable income and a strong credit score, which you may not have if you are new to the U.S. This is why, in the U.S., banks typically offer mortgage loans to U.S. citizens or permanent residents.

As an EB-5 applicant, you may not qualify for a traditional mortgage because you do not have the required permanent status yet. Some lenders offer mortgage products for foreign nationals, including programs based on alternative documentation or visa status, though these often involve stricter terms and higher interest rates.

Down Payment Requirements

If an EB-5 applicant is able to secure financing for a home purchase, it is common for lenders to require a higher down payment than they would for a U.S. citizen or permanent resident.

This is often because banks view these individuals as slightly riskier to lend to since they may not end up receiving a Green Card and may not have established roots that would keep them in the country.

Alternative Financing Options

Many foreign nationals choose to work with non-conforming alternatives, which may be more flexible than traditional banks.

Additionally, some investors may choose to pay in cash, especially if they are purchasing property as part of their investment strategy. Cash purchases eliminate the need for financing altogether and can make the process simpler and faster. This option is, of course, largely limited to high-net-worth individuals.

Tax Consequences of Purchasing Property as an EB-5 Applicant

Purchasing property in the U.S. as an EB-5 investor has significant tax implications that must be carefully considered. Specifically, even if the investor is not yet a permanent resident or U.S. citizen, owning property in the U.S. could still subject them to certain taxes.

In addition to other taxation they may face, such as income taxes, potential homebuyers should account for the following taxes in their financial planning.

Property Taxes

Regardless of residency status, property owners in the U.S. are required to pay property taxes to local governments. These taxes are generally based on the assessed value of the property.

It is important to be aware of local tax rates and how they may vary depending on the location of the property, as an area’s property tax burden can significantly affect the total cost of owning real estate in the U.S.

Capital Gains Tax

When selling property, EB-5 investors may be subject to capital gains tax.

If the property is held for over a year, it could qualify for long-term capital gains tax rates, which are generally more favorable than short-term rates.

However, capital gains tax can still apply to any profit made from the sale of the property, depending on various factors like the sales price, holding period, and any improvements made to the property.

Estate Tax

U.S. estate tax laws may also apply to foreign nationals who own property in the U.S. The estate tax is levied on the transfer of property after death and can be substantial.

EB-5 investors should consult with estate planning professionals to minimize the potential estate tax liability by understanding any applicable exemptions and structuring their property holdings appropriately.

Legal Implications of Buying Property Before Receiving a Green Card

While there are no restrictions preventing an EB-5 applicant from buying property in the U.S., there are legal considerations that must be kept in mind.

Purchasing property does not grant the investor permanent resident status or the right to stay in the U.S. indefinitely. In order to legally live and work in the U.S., an EB-5 applicant must complete the Green Card process. This includes receiving approval for their I-526E petition (the initial EB-5 application), applying for a Green Card, and obtaining conditional permanent resident status.

It is important to understand that while an investor can purchase property, they cannot lawfully live in the U.S. long term until their visa is approved. This is an especially important consideration for people looking to switch to EB-5 from a single-intent visa.

“Immigrant intent” refers to a person’s intent to immigrate to a country. This is important in the context of visas that are considered single intent such as B-2 tourist visas. Those on such visas are expected to leave the country when their visa is over, and any actions that United States Citizenship and Immigration Services (USCIS) believes shows an intent to stay beyond this time may violate this visa.

Investors on single-intent visas should generally wait until a reasonable amount of time passes before taking any actions that could be deemed to show immigrant intent. These include adjusting status to a dual-intent visa, applying for jobs, or purchasing a home.

If you are on a single-intent visa and want to switch to EB-5 and/or purchase a property, it is vital that you consult with an experienced immigration attorney to make sure you don’t violate the terms of your visa.

EB5AN Can Connect You With the Right Professionals

While EB-5 investors can indeed purchase property in the U.S. before receiving their Green Card, it is essential to approach the decision with careful consideration. Working with experienced professionals in immigration law, real estate, and tax planning will help ensure that the property investment aligns with both the EB-5 program requirements and the investor’s long-term goals.

By understanding the financial and legal implications, EB-5 applicants can make informed decisions about property ownership while pursuing their path to permanent residency and eventual citizenship in the United States.

EB5AN has helped more than 2,700 families from 70+ countries relocate to the United States as lawful permanent residents. Our expert team has more than a decade of experience, and we offer our clients first-rate, low-risk EB-5 regional center projects with a 100% USCIS project approval rate.

If you would like to know more about the consequences of purchasing a home in the U.S. as an EB-5 investor, book a free call with our expert team today.