May 2012
Housing Committee
Federal Committee
This material is for discussion purposes only and has not been approved by the Housing Committee, Federal Committee, Executive Committee or the Board of Directors.
Issue:
Should C.A.R., in conjunction with NAR, "SUPPORT" legislation that eases visa requirements for foreigners who purchase real estate in the U.S.?
Action:
Required
Options:
1. Take a "SUPPORT" position on legislation that would ease visa requirements for foreigners who purchase real estate in the U.S.
2. Take an "OPPOSE" position on legislation that would ease visa requirements for foreigners who purchase real estate in the U.S..
3. Take a "WATCH" position on legislation that would ease visa requirements for foreigners who purchase real estate in the U.S..
4. Take no action
Status/Summary
In an effort to stimulate the housing market, Senator Chuck Schumer (D-NY) and Representative Mazie Hirono (D-HI) have introduced S. 1746 and H.R. 3341, the Visa Improvements to Stimulate International Tourism to the United States of America Act. The proposed legislation would ease visa requirements many different ways, including the purchase of a home. Under the bill, if a non-U.S. resident purchases one or more homes using at least $500,000 cash and stays in the property for a minimum of 180 days a year they would qualify for a visa. The alien would not be allowed to work under this specific visa, nor would they be eligible for any form of assistance or benefits.
Background:
Under current law, foreigners who want to come to the U.S. and purchase property will often (though it is not the only way) utilize what is known as an EB-5 Immigrant Investor Visa. Under the EB-5, if a foreigner invests in the creation of jobs in the U.S. they may obtain a visa. The most popular form of job creation under this designation is an investment in a Regional Center. This can often require a sizeable investment of at least a $1 mllion before considering the cost of a home.
Factors that need to be considered on this issue include:
• Is the 180-day requirement in the bill appropriate language? Under current U.S. law, if a non-U.S. citizen stays in the U.S. for more than 180 days then their global income becomes taxable. Alternatively, a visa for Canadians allows them to stay "up to" 240 days. This allows the individual to decide if they wish to pay U.S. taxes or not.
• How should estate tax be treated? Estate tax exemption is only $60,000 for non-U.S. citizens. They are only taxed on U.S. holdings though. This is important for this issue because the legislation would require a sizable investment in U.S. property that would be subject to U.S. estate taxes.
• This would likely be attached to a larger immigration bill and thus would draw REALTORS® into a debate on immigration.
• Non-U.S. citizens of a certain socio-economic status enjoy their freedom of travel and prefer not to feel trapped in one location for too long.
Outlook:
There are a number of factors that would make it almost impossible for this legislation to pass prior to the end of this year. Perhaps most importantly, many politicians prefer to avoid contentious issues during an election year. There will be little political will by both sides of the isle to open the debate on immigration.
Support:
Supporters of easing visa requirements say -
• We should be encouraging foreigners to purchase properties in the U.S. as a way to stimulate demand for a still troubled housing market,
• The increased demand for homes will expedite the housing market recovery, and
• Many non-U.S. residents are being forced to jump through too many hoops in order to purchase and ensure the utilization of their property in the U.S.
Opposition:
Opponents of easing visa requirements say -
• Strong demand has already returned to the housing market and a program like this will only make it harder for homebuyers to purchase a home,
• REALTORS® should be careful weighing in on immigration issues, the political cost may outweigh the benefit of taking a position on such a hot-button issue, and
• The legislation as proposed is not ready for serious consideration and would in fact deter homeownership if passed as is.
C.A.R. Policy:
C.A.R. does not have policy on this issue.
NAR Policy:
This issue was discussed in multiple committees at NAR's Anaheim business meetings last November. The committees have created a working group to further research and analyze the legislation and its potential pros and cons. This working group is expected to report back to their committees at NAR’s May meetings.
NAR currently has policy supporting the taxation of non-U.S. citizens who reside in the U.S. for more than 180 days.
Should C.A.R., in conjunction with NAR, "SUPPORT' legislation that eases Visa requirements for foreigners who purchase real estate in the U.S.?
