Using proceeds from a property sale is a viable strategy for meeting the EB-5 investment requirements. Here’s how investors can leverage this method:
Property Valuation and Sale:
- Obtain a professional and accurate appraisal of the property to determine the market value of the property
- Engage with a real estate professional to list and sell the property. Ensure that the sale is conducted transparently and legally, with proper documentation such as title deeds and sale agreements
Documenting the Source of Funds:
- Provide evidence that the property was legally owned by the investor, such as title deeds, purchase agreements, and mortgage statements
- Include the executed sales agreement, closing documents, and any other relevant documentation as proof of the transaction
- Submit bank statements or other financial records indicating the following:
- How the investor earned and accumulated the funds used to purchase the home
- The receipt of the sale proceeds after the property was sold
The investor will need to maintain a clear record of the transfer from his or her bank account to the EB-5 project. Real estate transactions often come with clear and thorough documentation, which can ease the requirement of keeping meticulous records and demonstrating the lawful source of funds to USCIS.
Investors should be aware of potential capital gains taxes or other tax liabilities resulting from the sale of their property in the US or abroad.
Partial Investments
Investors can make partial investments using EB-5 funds, provided they plan to sell a property later to meet the full investment requirements. In such cases, the initial partial investment can be made with viable funds, understanding that the remaining funds from the property sale will be provided to the EB-5 project within 4 to 6 months after filing the petition.
All other initial funds must be sourced and documented thoroughly at the time of filing. The initial acquisition and purchase of the property should also be sourced and documented as described above in the initial filing. Once the property is sold, the investor should only need to submit the finalized sale documents, along with receipts and records of the transfer of sale proceeds to the EB-5 project. This process ensures that the investment remains compliant with EB-5 regulations while providing flexibility to investors who plan to sell a property shortly after the initial submittal.
If you have any questions regarding EB-5 source of funds, please email us at rpatel@patellegal.com and jtrevino@patellegal.com.