Presented by : Liz Perez Barletta, Esq.

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1 Presented by : Liz Perez Barletta, Esq. Boston, MA Cambridge, MA Newton, MA ebarletta@ligris.com Licensed Attorney in The Commonwealth of Massachusetts and in the State of Florida

2 Why should I purchase/invest in real estate in the U.S.? Do I need a Visa to do so? Can I get one by doing so? What is the best kind of real estate purchase/investment for me? Are there tax implications involved? How should I take title to the property? Once I decide I am ready to purchase, what is my next step?

3 Why not!? Historically, the U.S. has a more stable real estate market compared to many other nations. Real estate generally has a better return on investment than stuffing money under a mattress (which is still a common practice!) or depositing money in a bank. Investing in the U.S. could be a path to obtaining a Visa and therefore permanent residence and possible citizenship.

4 NO, a Foreign National does not need a Visa to purchase real estate in the U.S. All that a Foreign National needs to purchase real estate in the U.S., besides the desire to do so, is to have the ability to transfer funds from her home nation to the U.S. A Foreign National does NOT have to be in the U.S. for the closing (i.e. by using Power of Attorney and document delivery services).

5 Investing in real estate could be a way to obtain Treaty Visa (E-1/E-2). For this to happen, initially there must be a treaty of commerce and navigation between U.S. and National s home nation. E-1 Trader: National must be coming to U.S. to conduct substantial trade (sizeable, continuous exchange of goods/services/technology) principally b/w National s home nation and the U.S. E-2 Investor: National must be coming to U.S. to develop/direct operations of a bona fide U.S. enterprise (active undertaking producing services/goods for profit), in which she has made/will make substantial investment of capital (substantial relating to cost of operations and sufficient to ensure her commitment to enterprise; investment to be placed at risk (in commercial sense) w/objective of profit) Must show she owns at least 50% of enterprise or has sufficient control thereof (e.g. Manager). Enterprise cannot be marginal (must have present/future capacity to generate more than enough income to provide minimal living for National and her family). Initial stay 2 yrs, possible ext. 2 yrs ea w/no max., must always intend to leave end. How much to invest depends on many factors, but enough to show substantial trade or substantial investment of capital.

6 EB-5 Immigrant Investor: 5 th Preference of employment-based immigrant visas Must invest in new commercial enterprise (est. after 11/29/90, or prior but modified to be new Any for-profit activity formed for ongoing conduct of lawful business (e.g. sole prop., partnership, corp.). Must create/preserve at least 10 FT jobs for qualified U.S. workers w/in 2 yrs. of EB-5 approval. Direct job (identifiable within enterprise) Indirect job (created as result of capital invested in enterprise affiliated with a regional center) Can only be credited with preserving jobs in a troubled business Minimum investment capital: $1,000,000, or $500,000 if in high-unemployment or rural area Capital is cash, equipment, inventory, tangible property, cash equivalents and indebtedness secured by assets owned by the National, provided that she is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness. (Investment capital cannot be borrowed!) PROS: National is given permanent residence in the U.S. CONS: Government requires U.S. citizens and U.S. residents pay taxes on worldwide income, so EB- 5 investors will need to pay taxes on income/gains from all business/investment activity.

7 It depends! How much do you have to invest? Are you looking to buy a residence for yourself, or is the property solely for investment/income purposes? Either way, are you seeking to obtain a Visa by purchasing a property in the U.S.? If its just for investment, do you want to actively manage the property or are you more of a passive investor? If you only have, $200,000 to invest, you re looking at something small like a condo, which is perfect for a passive investor. But if you have $1,000,000 to invest, your investment could be more complex like several small homes or condos, or a small apartment building, which may require active management.

8 Again, it depends Are you a Non-Resident Alien (i.e. a person who is not a U.S. citizen and who doesn t pass the green card test or substantial presence test)? Or are you a Resident Alien (i.e. a person who is not a U.S. citizen but who does pass either the green card test or substantial presence test)? Or are you a Dual-Status Alien (i.e. a person who changes status in a current year from non-resident alien to resident alien or resident alien to non-resident alien)? DISCLAIMER: Any person/entity with tax-related questions should consult with a tax professional, such as a CPA or a tax attorney, for assistance. By presenting this slide, neither Liz Perez Barletta, Esq. nor the firm of Ligris & Associates, P.C. intends to be viewed or categorized as a CPA, tax attorney or other tax professional.

9 Non-Resident Aliens are subject to taxation generally only on income generated in the U.S. (but in some circumstances, on some foreign source income) and on estates/gifts based on U.S. property/assets. Resident Aliens are subject to taxation in the same manner as U.S. citizens (i.e. on any income, estate or gift worldwide). DISCLAIMER: Any person/entity with tax-related questions should consult with a tax professional, such as a CPA or a tax attorney, for assistance. By presenting this slide, neither Liz Perez Barletta, Esq. nor the firm of Ligris & Associates, P.C. intends to be viewed or categorized as a CPA, tax attorney or other tax professional.

10 Regarding Estate/Gift Taxes Unlike Resident Aliens and U.S. Citizens, Non-Resident Aliens do not receive a lifetime gift tax exemption (also called the basic exclusion, which is $5,340,000 as of 2014), but are entitled to use the same annual exclusion ($14,000 as of 2014). Every transfer of real and tangible property in the U.S. in excess of said annual exclusion is subject to gift tax. Non-Resident Aliens do receive an estate tax exemption of $60,000 (as opposed to the aforementioned $5,340,000), unless there is an estate tax treaty allowing a higher exemption amount. If exemption limits are exceeded either by a Non-Resident Alien or a Resident Alien, that Alien (or her heirs) will owe estate/gift taxes of up to 40%. DISCLAIMER: Any person/entity with tax-related questions should consult with a tax professional, such as a CPA or a tax attorney, for assistance. By presenting this slide, neither Liz Perez Barletta, Esq. nor the firm of Ligris & Associates, P.C. intends to be viewed or categorized as a CPA, tax attorney or other tax professional.

11 FIRPTA: Foreign Investment in Real Property Tax Act of 1980 The disposition of a U.S. real property interest by a foreign person (transferor) is subject to FIRPTA income tax withholding (disposition includes a sale or exchange, liquidation, redemption, gift or transfer). Purchaser (transferee) must withhold 10% of the amount realized on the disposition (i.e. usually, the amount paid for the property). NOTE: Just because the buyer/transferee completes the required withholding does not mean that the foreign person has satisfied her tax liability. There are several exceptions to FIRPTA withholding, but notification requirements must be met (see IRS website for more details). DISCLAIMER: Any person/entity with tax-related questions should consult with a tax professional, such as a CPA or a tax attorney, for assistance. By presenting this slide, neither Liz Perez Barletta, Esq. nor the firm of Ligris & Associates, P.C. intends to be viewed or categorized as a CPA, tax attorney or other tax professional.

12 Personally/Individually (consider personal tax implications) Sole owner With another as Joint Tenants with Rights of Survivorship (each joint tenant owns equal share of the property, and if one tenant dies her interest automatically passes to surviving tenant) With another as Tenants In Common (each tenant in common can have a different ownership interest, and if one tenant dies her interest passes to her heirs) With another as Tenants By The Entirety (between husband and wife only, and if either one dies that interest goes to surviving spouse) Foreign LLC LLC created in the U.S. takes title to the property, but the legal Manager of the U.S. LLC is a foreign entity. Could benefit from estate tax protection as property held this way is considered property located outside U.S. jurisdiction, even though located in the U.S. DISCLAIMER: Any person/entity with tax-related questions should consult with a tax professional, such as a CPA or a tax attorney, for assistance. By presenting this slide, neither Liz Perez Barletta, Esq. nor the firm of Ligris & Associates, P.C. intends to be viewed or categorized as a CPA, tax attorney or other tax professional.

13 It s all about the TEAM: Real estate agent/broker Loan/mortgage officer (shop around for best rates!) Real Estate attorney e.g. Liz Perez Barletta of Ligris & Associates, P.C. And don t forget to T.I.E. up loose ends Tax Attorney (and/or CPA) Immigration Attorney Estate Planning Attorney