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How is EB-5 investment capital taxed when investors get it back?

When investors complete the entire process of EB-5 and get their investment capital back, do they need to pay taxes for it? Do they need to report it to the IRS? If investors suffer loss on the investment, are they still subject to any types of taxes?

Answers

  • Avatar

    Marko Issever

    EB-5 Broker Dealer
    Answered on

    If you are simply getting back your capital with no capital gains or losses, that is called the return of investment and is not subject to tax. If, on the other hand, your capital grows and you are paid back an amount more than your investment, you would be subject to capital gains tax. Finally, if you get back an amount less than your investment amount, that would mean that you have experienced a capital loss, which you could theoretically use against capital gains you might have elsewhere. The treatment of taxes when there is a capital gain or a capital loss is quite complicated. If that were to happen, you should certainly seek the advice of a tax attorney or accountant.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    I bring in an international accountant for things like this. I may know EB-5 laws and policies well but tax? I leave that to an expert.

  • Avatar

    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    Generally, if there are profits then you do have to pay taxes on the profits. The regional center will report them on your K-1.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    Best to discuss with a tax professional.

  • Avatar

    Dale Schwartz

    Immigration Attorney
    Answered on

    No taxes. It is a return of your investment capital. If you get more back than you put in, then the difference is taxable, either as ordinary income or capital gains. A loss would probably be a long-term capital loss.

  • Avatar

    Charles Foster

    Immigration Attorney
    Answered on

    You pay U.S. tax only on your income from the investment, not on the investment amount.

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