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What constitutes an asset for EB-5 investment purposes?

I have read in various places that an asset can count towards the $500,000 investment. What constitutes an asset for EB-5 investment purposes? Are homes considered an asset?

Answers

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    If you contribute assets such as equipment, machinery, inventory or other business assets with monetary valuations that can be clearly demonstrated, then these assets can be used in your EB-5 investment as long as you can demonstrate that you own the asset(s) and that you lawfully obtained them. Contributing a home to your new commercial enterprise as a business asset does not make sense and likely would NOT be considered part of the qualifying capital investment into the new commercial enterprise.

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    Barbara Suri

    Immigration Attorney
    Answered on

    EB-5 requires “at risk” capital, usually cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by you, provided you are 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. You should invest the entire amount, without using any promissory notes. You can; however, borrow money from banks using your personal assets, such as your home, etc. If you are guaranteed the use of your home in consideration of your contribution of capital into the new commercial enterprise, the expected present value of the guaranteed ownership or use of such an asset does not count toward the total amount of your capital contribution in deciding how much money was placed at risk.

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    John J Downey

    Immigration Attorney
    Answered on

    When they speak of assets they mean assets that can be used rather than cash for the investment. You could use equipment, supplies, etc. toward the investment. A house would not qualify.

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    Robert Lee

    Immigration Attorney
    Answered on

    Assets for investment are more like machines, property, or any tangible asset that the company would use and have a value for. So if you have a factory machine that you gave to the company for your investment, you could use the fair market value of that asset to count towards your investment. A personal home can be used, but it has to be through a mortgage loan or sale of property.

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    Rachel Lew

    Immigration Attorney
    Answered on

    8 CFR section 204.6(e) defines capital in the EB-5 investment process as cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the I-526 petition is based are not used to secure any of the indebtedness. If the investor owns a home outright, he/she can sell the home and use the proceeds of the sale transaction for EB-5 investment. In this sale of home scenario, the investor should provide documentation, including but not limited to, sale and purchase agreement, final settlement agreement, escrow statement and investor's bank statement verifying that the sale proceeds were received by the investor. Or the investor can apply through a reputable bank for a home equity loan of $500,000 that is secured by the home as collateral to attain the capital needed for the EB-5 investment. The investor has to show his/her apparent financial means to repay the home equity loan before filing the I-829 petition for removal of conditions. In this scenario, the investor should provide documentation of the loan agreement, settlement agreement and personal bank statement showing outgoing funds and the investor's receipt of funds from the bank and a real estate appraisal report showing the current market value of the home.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    A home can be used; either the proceeds in selling that home or collateral on a loan.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    While homes and other real estate holdings are considered as part of your assets, your primary residence is excluded from being part of the $500,000 investment. The basis for this policy, logically, is to have EB-5 investors putting at risk only those properties/assets that they could stand to lose if the investment fails, not the home in which they live, so they could possibly become homeless if things go wrong.

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    J Bruce Weinman

    Immigration Attorney
    Answered on

    The same thing that constitutes an asset for accounting/tax purposes. Of course a home is an asset - but owning and operating a personal residence is not a suitable business for EB-5. I need to know more about what you are doing to know whether this actually works.

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    Daniel P Hanlon

    Immigration Attorney
    Answered on

    An asset can be used as part of an investment if the asset itself is committed to the investment enterprise.

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