By Attorneys Robert L. Reeves and Joseph I. Elias
On October 20, 2011, Senators Schumer and Lee introduced an exciting new immigration bill intended to promote investment and immigration in the United States. The bill proposes a new three-year residential visa for foreigners who invest at least $500,000 in residential real estate in the United States. There will be no cap on the number of visas that can be issued in this new category and it will allow foreign buyers to live in the United States along with their family members.
This bipartisan Bill requires a visa applicant to invest at least $500,000 in residential real estate. At least $250,000 must be spent on a primary residence where the visa holder will have to reside for at least 180 days out of the year. The remaining $250,000 may be invested in residential real estate rental property as an investment for the visa applicant. The new visa category would be valid for three years admission into the United States at a time.
The visa would require the $500,000 be paid in cash and could not come from financing such as a mortgage or home equity loan. Also, in its current form, the bill would require the qualifying property to be bought for more than its most recently appraised value. If the buyer sold the home, the visa status would immediately expire.
The visa is meant to entice foreign buyers and increase demand for the US housing market. But, in the bill’s current form, the buyer and family members would not be eligible for work authorization. They would need to obtain separate working visas in order to work in the US. Also, the bill does not provide a path to permanent resident status.
Without work authorization, or a path to permanent resident status for the buyer and family members, there is little incentive for this type of visa. This is even more poignant given the requirement that the buyer must live in the US for 180 days per year. By living in the US for 180 days per year, the buyer’s worldwide income becomes subject to US income taxes. In order for this to be a truly workable solution for foreign buyers, the bill must offer greater incentives other than to simply allow someone to reside in the US. There must be a path to permanent residency and work authorization in exchange for having one’s worldwide income subject to US income tax.
Billionaire investor Warren Buffett and others have advocated boosting the U.S. economy by attracting foreign investment. But the key concept here is that it must be attractive. The proposed bill is a step in that direction. But, it will require additional incentives such as work authorization and a path to permanent residency to be effective. This bill is bipartisan recognition that US Immigration can be a useful tool to strengthen the United States and bolster its economy. This kind of understanding is needed not only for wealth foreign investors, but, for other immigrants who have a positive impact on the United States. We trust the Senate and House will work in earnest towards Immigration options and solutions for the United States and its immigrant supporters.
