How to Utilize Rental Income for EB-5 Investments
All EB-5 investment funds must be traced with thorough documentation proving they were lawfully obtained. This is critical to obtain approval of your EB-5 application. The source of funds can vary widely, from income savings, business profits, and sale of assets to gifts and inheritances. Each source requires specific types of documentation and can vary from investor to investor.
For instance, if investment funds were derived from rental income from a house or apartment the investor owns, the investor would need to provide the following documentation to trace the source and path of funds:
- Bank statements and other financial records indicating how the investor earned and accumulated the funds to purchase the property
- For example, suppose W-2 income was used to purchase the property. In that case, the investor must provide complete tax returns, W-2 forms, paystubs, bank statements, and employment verification records to trace the funds back to their origin.
- Evidence that the property was legally owned by the investor, such as purchase agreements, deeds, and mortgage documents
- The lease or rental agreement to detail the terms of the rental income, including the rent amount and lease duration
- Bank statements indicating receipt of rental payments
- Any receipts or invoices related to the rental payments
The investor must keep detailed records of the receipt and transfer of rental income from their personal bank account to the EB-5 project. The process for verifying this type of source of funds is the same whether the investment is made directly or through a regional center. Both approaches require thorough documentation to prove the funds are legally obtained and traceable.
If you have any questions regarding EB-5’s source of funds, please email us at rpatel@patellegal.com and jtrevino@patellegal.com.