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US EB-5 investor visas:
what you need to know

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Reginald Labuschagne

Head of Product and Strategy

On 30 June this year, the EB-5 investment visa programme popular among South Africans seeking permanent residency in the US is set to lapse – and it’s not yet clear whether the US Congress will renew the sought-after programme. Either way, investors looking at securing ‘green cards’ via EB-5 need to be aware of the not inconsiderable pitfalls of going this route – or they could put their entire investment at risk as well as fail to obtain a green card.

The US EB-5 visa programme – run by US Citizenship and Immigration Services (USCIS) – enables would-be emigrants to the US to become permanent residents by investing in an enterprise in what’s known as a ‘targeted employment area’ in that country. The investment needs to create or preserve at least 10 permanent full-time jobs for US workers.

Congress established the EB-5 programme in 1990 with the aim of stimulating the US economy through job creation and capital investment by foreign investors. Most EB-5 projects involve commercial real estate developments. Investors can either consider the projects of individual property developers, or invest through regional centres designated by USCIS. Schemes operated via these centres are often still backed by single-asset developers, however. Another option is therefore to opt for a diversified model that invests in a portfolio of property assets instead of a single project.

From November 2019, USCIS introduced regulations increasing the minimum amount to be invested in a targeted employment area from US$500 000 to US$900 000, but despite the sharp hike in the investment level, the EB-5 programme remains popular among South Africans seeking to obtain US permanent residency.


It’s not yet certain whether the US will re-authorise the programme when it expires at the end of June 2021. While there are still a few weeks left in its current iteration, South Africans aiming to go the EB-5 route to secure a green card need to consider these crucial factors:

  • There’s no guarantee that invested capital will be returned. Projects involving individual property developers carry a real risk of non-delivery. If the developer goes bankrupt or fails to sell the project on completion – to a hotel group or property fund, for example – you could lose your entire investment or be stuck in a bad investment for a considerable period of time.
  • In addition, if the project in question doesn’t deliver the number of jobs required, or fails to meet other EB-5 requirements, you may not be granted a visa.
  • You’re unlikely to see any growth on your investment. Technically, it’s not an ‘investment’ in the usual sense of the word – you’re essentially transferring the funds in order to obtain a green card.
  • Schemes offering fund diversification models offer better protection against risk, and you may even be offered some potential upside or return on your investment. However, you’ll still need to do your homework and scrutinise their track record. What is their success rate? How long have they been in operation? How diversified is the portfolio? Do they have the necessary regulatory approval?
  • Be aware that the US EB-5 visa programme is not for people looking for a ‘back-up plan’ in terms of foreign residency – if your application is successful, you’ll need to spend considerable time in the US.
  • Approval will result in you obtaining conditional permanent residency in the US for a period of two years, allowing you and your family to live and work there. During this period, you’ll have to comply with the physical presence requirements. If these conditions aren’t met, you’ll need to obtain a re-entry permit.
  • If you hold a conditional green card, it’s important to demonstrate that you intend to reside in the US permanently. Absences for periods exceeding six continuous months can result in the presumption that you’ve abandoned your lawful resident status.
  • The tax consequences of applying for and enrolling in the US EB-5 visa programme could be significant, not to mention highly complex – timeous, independent, expert tax advice is essential.

In a nutshell, if you’re considering the US EB-5 visa programme, you should approach it in the same way you would an investment: be clear on the objective (in this case, obtaining a green card) and scrutinise the risks associated with it.

If you’re going the single-asset route, ensure you conduct a thorough due diligence on the project, including the financial situation of the developer. If you need further protection against loss of capital, however, then select appropriate diversified models or schemes run by reputable persons to mitigate the risks. The best option is to seek advice from a professional to provide guidance on the process.

If you’d like further information on the potential tax consequences of investing in the US EB-5 visa programme, please contact Anton Maskowitz at or 011 778 6641.

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