The Tricks and Difficulties of the Investor Category

Temporary Residency for Investors is a 2-year Residency reserved for people who have either invested $200,000 in a property and/or vehicles or $200,000 in a business or $100,000 applicable in forestry projects. You cannot mix them together to reach the minimum investment. For example, you cannot purchase a $75,000 property and invest $125,000 in a business and add them up.

You need to either invest in a property, several properties, a property and a vehicle, several vehicles and get to the minimum of $200,000. Or you must invest $200,000 in a business. Or the $100,000 in a forestry project. In this article, we will concentrate on the most popular way to secure Residency as an Investor through the purchase of a property and/or vehicles.

What our law state is that the applicant needs to show that they have invested at least $200,000 in the property, properties, and/or vehicles. Therefore, the two basic documents that Immigration will demand to see are:

1. The documents from the registry detailing who is the owner of the property and/or vehicle.

2. Document issued by the Municipality showing the true value of the property and confirming that the applicant is up to date with all applicable taxes.

Evidently, if the property and/or vehicles are purchased through a corporation, the good standing certificate, as well as the share distribution certificate, will be mandatory.

The share distribution certificate is where we see the most mistakes when people come to us for help regarding this category. It is common to see a couple purchase a property using a corporation and divide the shares equally so that each spouse has equal participation. This is a good tactic, but you need to be careful. If you buy a property worth $250,000 and split the shares 50/50, neither of you would qualify any longer. The trick of the category is to have the principal applicant evidence that he/she has invested at least $200,000. If you own 50% of the shares of a corporation that owns a $250,000 property, per Immigration’s standards, you solely invested $125,000, way below the expected minimum of $200,000.

Therefore, If the property was purchased through a corporation, the principal applicant must hold shares that equal to at least $200,000.

If you find yourself in a situation similar to the one described above with the $250,000 example, you will need to redistribute the shares of the corporation and file a new share distribution certificate before Immigration to fix this issue.

Evidently, this will not be an issue if the corporation holds a $400,000 property. Either spouse can then be the principal if the shares are split 50/50 as both would own shares equal to $200,000.

Now, another interesting situation is what happens if you invested in a lot and the purchase price of the lot was below the $200,000, however you are building a home on this lot that will put you over the $200,000? In that case, you need to conclude the construction of the house or casita or whatever it is that you are building. Once the construction concludes you need to update the total value of the property at the Municipality. The total value (lot + building) shall be at least $200,000. This Municipality document is key and mandatory in an Investor application and the true value of the property shall reflect an amount of at least $200,000.

Please be advised that furniture does not add up to the $200,000 minimum.

This approach of updating the value of a property through the Municipality could also come in handy if you purchased a property years ago and the value of that property has gone up. If you can get the Municipality to raise the value of the property (and, consequently, the taxes you need to pay) to a minimum of $200,000, you could qualify for the category. This is not our preferred approach, but we have made it work in the past.

Evidently, updating the value of a property before the Municipality can be easy, but it can get complicated. Normally Municipalities are delighted to have someone willingly ask for the value and taxes to be raised. But they are also cautious. Municipalities sometimes demand to complete a proper and full appraisal of the property before updating its value having an engineer act as an appraiser.

Another common processing challenge we face when handling Residency as an Investor for our clients is, funny enough, working with other colleagues. When our Residency clients have worked with other attorneys to purchase their property and engage us to assist with Investor, we must work hand in hand with the colleague or colleagues who handled the closing. Generally, this is a very pleasant experience, other times, it is challenging. If the counterpart is not willing to collaborate, the process can get stalled, suffer delays, and cause unnecessary stress for the client.

It is important to remember that to renew your Temporary Residency as an Investor, you will be required to present documentation to prove that you still own property worth at least $200,000. Therefore, properly setting up the purchase, share the distribution of your corporation, updated the value of the property, these are things that have lasting effects and should be considered when moving forward with a purchase intended for Residency.