South Bay Association of REALTORS®
Immigration, Taxation, and Transactions
Presented by Jared Leung
November 1, 2012
Advantages of U.S. Real Estate Market
 Prices of properties at historically low
level
 Many good buys at all price levels
 Weak U.S. dollars
 Real property is sold as fee-simple (vs.
lease-hold in some countries)
 Real estate prices at very high level in
Asia markets
○ Not good investment
○ Government control – only one
property per person in a given city
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Who are International Buyers?
 Individuals looking to diversify their
portfolios
 Individuals who want to move money out
of their home countries for “insurance”
purposes
 Individuals with immediate or future plan
to immigrate to the U.S.
 Individuals who have kids attending
schools in the U.S.
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Identify your Clients’ Goals
 Ability to travel back and forth the U.S. and
home country
 Ability to immigrate to the U.S. (Green
Card)
○ Self
○ Family (Spouse / Children)
 Mixed
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Relevant Visa Law for Investors
 B-1 Business Visitor Visa
○ Enter the U.S. to investigate
business opportunity
○ Okay to visit investment
sites, meet with real estate
agents, lawyers, accountants,
negotiate contracts
○ Cannot “work” in the U.S.
 Surge of Visa Issuance
○ 555,000 in Brazil in first half
of FY 2012 (compared to
350,000 in FY 2011)
○ 453,000 in China in first half
of FY 2012 (compared to
310,000 in FY 2011)
 B-2 Visitor for Pleasure
○ “Tourist” Visa
○ Vacation
○ Shopping
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Relevant Visa Law for Investors
Visitor Visas
Apply directly at U.S. Consulate in home country
○ Show reasons to return to home country after
trip to the U.S.
○ Demonstrate Family, economic, social ties
○ Show financial ability to stay in the U.S.
○ Helpful to have traveled outside of home
country before
Visa waiver countries: Brunei, Japan,
Singapore, South Korea
○ 90 days admission
○ Cannot extend or change status
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Visa Waiver Countries
 36 Countries
Andorra
Hungary
New Zealand
Australia
Austria
Belgium
Brunei
Iceland
Ireland
Italy
Japan
Norway
Portugal
San Marino
Singapore
Czech Republic Latvia
Slovakia
Denmark
Liechtenstein
Slovenia
Estonia
Lithuania
South Korea
Finland
Luxembourg
Spain
France
Malta
Sweden
Germany
Monaco
Switzerland
Greece
the Netherlands United Kingdom
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What is EB-5 Investment Immigration?
 10,000 “green cards” are allocated each year
for investors who meet EB-5 requirements
 Investors’ spouse and children under 21
years old are covered
 Used commonly by:
○ Retirees
○ Business people who want their children
to have opportunities to study in the U.S.
○ International students with resources
and business ideas
○ Other entrepreneurs who want to invest
in the U.S. and get “green card” along
the way
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EB-5 Investment Immigration
 Requirements
○ Investment of “Capital”
• U.S.$1,000,000
• U.S.$500,000 if
investment is in (a) rural
area or (b) targeted
employment area
• Cash or other “Capital”
○ Creation of 10 FT Jobs
○ Engage in a “New
Commercial Enterprise”
• New = Established after
November 29, 1990
• Active business for profit
• Cannot be passive
investment – real estate
holdings, stocks
○ Must have some managerial
role in business
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EB-5 Investment Immigration
 Personal Residence / Time-shares
○ Okay to buy for long term
investment or personal use, but not
for EB-5 purposes
 Common EB-5 projects (Think Active
business & Job Creation )
○ Hotel / Motel
○ Car Wash
○ Restaurant
○ Mixed use office / commercial /
residential property
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Traditional Investment
 Establish a new business (after 11/29/1990)
 Save a troubled business or restructure an existing business (Okay with R.C. but
rarely used)
○ Save a troubled business – Net Loss over 20% in last 12 or 24 month period
○ Save ALL jobs (Must still meet “creation” of 10 jobs requirement)
○ Restructuring must be substantial
○ Stringent rules apply – best to avoid)
 Direct creation of 10 jobs
○ Consider business that requires labor
(restaurant, hotel/motel)
 Employees must be legal in the U.S.
 Investor needs to have some managerial role
in the business
 Have more control of the investment
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Regional Centers
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Geographically linked “units” authorized by CIS for EB-5 purposes
Real-estate and Loan projects
Indirect and induced job creation permitted
Investors do not need to actively manage the business (Limited partners
ok)
Investors do not need to live inside the regional center
Feel more safe and secured
What it does not mean:
○ Automatic approval from CIS – Investors must still satisfy CIS
requirements
○ There is no risk or lower risk
○ There is no need to prove job creation
Current Sunset date: September 30, 2015
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Steps and Estimated Timing
Step 1: Submit application to CIS by filing Form I-526 (Est. 6
months).
Step 2: After I-526 is approved, attend interview at U.S.
Consulate in home country or submit I-485
application (Est. 6 months)
Step 3: After successful interview or approval of I-485
application, investor becomes conditional
permanent resident (temporary “green card”) for 2
years
Step 4: 90 days before 2 years expiration date, submit
application to obtain permanent “green card” by
filing Form I-829. Prove investment of requisite
amount was made, investment went according to
plan, and 10 jobs were created (Est. 1 year)
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Common Challenges with EB-5
 Tracing source of funds
○ Every dollar must be legal and accounted for
○ Loans or gifts from family are okay but CIS will demand to
know the origination of the loans/gifts came from a legal
source
○ Bank loan is permitted if secured by assets not part of
investment
 Transferring money to U.S.
 Traditional investment – ability to maintain a business in the
U.S. and navigate the U.S. law
 Regional Center – investment usually locked in for at least 5
years
 Investment has to be at risk – Guarantee of return is prohibited
 Must create 10 jobs until “permanent” green card is approved –
still an open issue with USCIS
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Relevant Legal Development
 Push for “Invest USA”
 “Brand USA” Success: 2011
international visitors contributed to
0ne million jobs by spending $152
billion on U.S. travel and tourism
related goods and services (every
additional 65 international visitors =
1 job
 U.S. has increased visa processing
capacity worldwide
 Continue increase enrollment of
foreign students
○ 723,277 in 2010 / 2011 academic
year; increase of 5%
 “Entrepreneur in Residence”
initiative
 Closer scrutiny in path of funds
 Some suggest to increase capital
requirements
 Some RCs have failed, drawing
attention to Chinese Government
and investors
 Security check delays for some
countries
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Other Consideration
 Keeping the U.S. green card
○ Absence from U.S. less than 6 months –
usually ok
○ Absence from U.S. for 6 to 12 months –
problems
○ Absence from U.S. for more than 12
months – loose green card through
abandonment
 Eligible to apply for U.S. citizenship 5 years
from date of attaining conditional permanent
residence
 Tax consideration
 Children over 21 cannot receive green card as
a dependent
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Other Opportunities
 Buying properties purely as investment – usually cash transactions
 Buying properties for children attending university in the U.S., using rental
income to pay for children’s education
 Giving money to children to immigrate through investment – saving of
tuition because children qualify for “in-state” tuition
○ UCLA: $12,686 v. $35,564
○ UC Riverside: $11,851 v. $34,729
○ UC Davis: $15,123 v. $38,001
 Properties shopping trips
 “One stop service” approach – housing, school district,
shopping, rental returns based on sound analysis and statistics support
 Best source of referrals – your clients
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Leverage your International Contacts
 Understand your contacts’ Goals
 Understand your investors’ timing
 Understand your investors’ culture
○ Emphasis on children’s education
○ Decision making time
○ Superstitious numbers “4” & “8”)
 Be a resource to your clients
 Do what you do best – finding great
houses
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Thank You Very Much
Questions
Contact Information
Jared C. Leung
Fennemore Craig, P.C.
3003 North Central Avenue, Suite
2600
Phoenix, AZ 85012
Tel: +1 602-916-5315
Fax: +1 602-916-5515
Email: jleung@fclaw.com
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