Gifted funds derived from the sale of real estate can be used to fund an EB-5 investment if the investor can prove that they legally own the gifted funds, that the funds were a gift, and that the real estate sold was legally obtained. Thus, the source-of-funds documentation must show not only where the funds originated but also how the donor came to own the real estate sold to generate the funds.
The two main EB-5 program requirements to keep in mind in this scenario are proving legal ownership of the capital and the lawful source of the capital for both the gift recipient, or the investor, and the donor. The exact documents required in support of Form I-526 vary because no two applicants have the same circumstances. Generally, the source-of-funds documents should include a capital source statement detailing that the investment amount was a gift. This statement should include the details of the donor and information about how the donor acquired the funds. The donor should also submit a capital source statement that shows how they obtained the funds. The two statements must agree.
Additionally, the investor should include a deed of gift that confirms the funds are a gift and not a loan and bank statements showing the deposit of the funds. The donor should include details on how they acquired the real estate they sold. For example, if they bought the real estate, they should demonstrate that they legally acquired the funds used in the transaction. They should also include purchase and sale contracts, tax certificates related to the property, a copy of the deed of ownership, and bank statements showing the proceeds of the sale being paid to them.
Proving EB-5 investment funds derive from a legal source is a complex yet vital process. Investors should retain EB-5 immigration counsel to help them with the Form I-526 application and to improve their chances of success.