International real estate in your portfolio provides several benefits.
- For folks from the U.S., a nonreportable international asset.
- A refuge in times of political or economic uncertainty.
- A ready-made vacation location.
- Asset protection—it’s very difficult for creditors to seize real estate in another country.
- Protection from foreign exchange controls.
- The possibility of profiting from rental income or if the value of the property appreciates.
- A hedge against the possible decline in value of the U.S. dollar
But there’s another huge potential benefit: second citizenship and passport.
A second citizenship and passport provide several very powerful benefits. Perhaps the most important one for U.S. citizens is that it gives you a way to travel internationally or live outside the United States if Uncle Sam confiscates or refuses to renew your passport.
This happens a lot more often than you might think, since federal law now requires the State Department to revoke the passport of any American with a “seriously delinquent tax debt.” Nearly 400,000 passports have been revoked or nonrenewed on this basis.
A second passport can also give you the right to reside in other countries, expand your travel possibilities, reduce your profile to terrorists, and provide you with a way to cross international borders if your primary passport is lost or stolen. It may also give you a way to leave a country whose borders are closed due to war or civil conflict.
There’s one additional and important benefit to a second passport for U.S. citizens: expatriation planning. The United States is the only major country to impose citizenship-based taxation. Put simply, even if you reside outside the United States full-time, Uncle Sam taxes you (with very limited exceptions) as if you never left.
The only way to legally and permanently end this obligation is to give up your U.S. citizenship and passport. But of course, unless you’re willing to become stateless—literally a person without a country, and not recommended—you’ll need to first acquire a second citizenship before giving up your U.S. citizenship. Here’s a rundown of the countries where simply buying real estate can entitle you to this substantial benefit.
The Caribbean is home to the largest selection of citizenship by investment (CBI) programs based on a real estate investment:
- Antigua & Barbuda. Minimum $400,000 purchase; five-year holding period before you can sell. Visa-free access or visa on arrival to 151 countries.
- Commonwealth of Dominica. Minimum $200,000 purchase; three-year holding period. Visa-free access or visa on arrival to 143 countries.
- Grenada. Minimum $220,000 purchase; three-year holding period. Visa-free access or visa on arrival to 144 countries.
- St. Lucia. Minimum $300,000 purchase; five-year holding period. Visa-free access or visa on arrival to 146 countries.
- St. Kitts & Nevis. Minimum $200,000 purchase; seven-year holding period. Alternatively, you can make a minimum $400,000 purchase and sell the property after only five years. Visa-free access or visa on arrival to 157 countries.
All five of these programs have broadly similar application requirements and ancillary costs. None of them require a personal visit to qualify for citizenship, although Antigua & Barbuda and Grenada require a personal appearance at an embassy (or in the country itself ) to swear an Oath of Allegiance. You must also purchase “qualified” real estate in an approved development. Expect to pay up to a $50,000 registration fee for the main applicant and $25,000 or more for dependents, along with due diligence fees of $7,500 for the main applicant and $4,000 or more for dependents over the age of 16.
St. Kitts & Nevis imposes no personal income tax.
While there is some variation in the quality of the passports issued by these countries, all of them permit visa-free access to all member countries of the European Union, the United Kingdom, and Switzerland. Travel to the United States and Canada requires a visa. All five countries permit dual citizenship and none of them impose income tax on individuals who are physically present for less than six months (183 days) annually in their respective territories. St. Kitts & Nevis imposes no personal income tax at all. There are, however, some important differences. St. Kitts & Nevis has by far the largest number of real estate projects to choose from; hardly surprising since it’s the world’s oldest CBI program. Grenada is the only country in this region with an investor visa treaty with the U.S.; an important consideration as it gives its citizens the opportunity to live in the U.S while operating a business without needing a visitor’s visa or a green card.
- Montenegro. Minimum €250,000 ($293,290) purchase in an approved development in the northern region of the country or €400,000 ($470,000) in the southern region plus a €100,000 ($117,316) donation; five-year holding period. No language requirement; dual citizenship allowed. Visa-free access or visa on arrival to 124 countries including all E.U. member countries and Switzerland. Travel to the United States and Canada requires a visa. Note: This program will be discontinued at the end of 2021.
- Turkey. Minimum $250,000 ($293,290) unrestricted real estate investment; three-year holding period. No language requirement; dual citizenship allowed. Visa-free access or visa on arrival to 111 countries including all E.U. member countries and Switzerland. Travel to the United States and Canada requires a visa.
- Malta. Minimum €700,000 ($821,155) unrestricted real estate investment; five-year holding period, plus €610,000 ($715,570) to €760,000 ($891,540) in mandatory contributions. Requires 12 months of legal residency to qualify for citizenship with €760,000 contributions; 36 months for €610,000. No language requirement; dual citizenship allowed. Visa-free access or visa on arrival to 186 countries including all E.U. member countries, Switzerland, the U.S., and Canada.
Golden Visas in Europe
Several European countries offer “golden visa” programs that offer permanent residency in exchange for an investment, including (in some cases), a real estate investment. After an extended period of legal residency, you can qualify for citizenship and be eligible for a passport.
- Cyprus. Minimum €300,000 ($352,000) real estate investment purchased directly from developer and proof of minimum annual income of €30,000 ($35,200). No minimum stay requirement. Eligible for Cypriot citizenship after 10 years with proof of physical residence. Dual citizenship permitted. Intermediate Greek language proficiency required for citizenship. Visa-free access or visa on arrival to 176 countries including all E.U. member countries, Switzerland, and Canada. A visa is required to visit the United States.
- Greece. Minimum €250,000 ($293,290) unrestricted real estate investment. No minimum stay requirement. Eligible for Greek citizenship after seven years with proof of physical residence and filing tax returns. Dual citizenship permitted. Intermediate Greek language proficiency required for citizenship. Visa-free access or visa on arrival to 186 countries including all E.U. member countries, Switzerland, the United States, and Canada.
- Portugal. Minimum €280,000 ($328,383) real estate investment in restricted areas; €500,000 ($586,399) in major cities. Seven-day minimum stay requirement in first year of legal residency; 14 days every two years thereafter. No minimum stay requirement after five years of legal residency with acquisition of permanent residency. You’re eligible for Portuguese citizenship after six years without proof of physical residence beyond minimum stay. Dual citizenship permitted. Basic Portuguese language proficiency is required for citizenship. Visa-free access or visa on arrival to 188 countries including all E.U. member countries, Switzerland, the United States, and Canada.
- Spain. Minimum €500,000 ($586,399) unrestricted real estate investment. No minimum stay period. Eligible for Spanish citizenship after 10 years with proof of physical residence and social integration in the country. Dual citizenship generally not permitted. Basic Spanish language proficiency required for citizenship. Visa-free access or visa on arrival to 190 countries including all E.U. member countries, Switzerland, the United States, and Canada.
There’s an important distinction to be made between countries that allow you to choose any real estate within the country over a certain value versus those that require you to purchase only government-approved real estate. The bottom line is that “unrestricted” real estate is much easier to sell.
For instance, to resell real estate purchased through one of the Caribbean citizenship programs to someone else seeking citizenship, you’ll generally need to go through a bureaucratic process to obtain permission to do so. It can take months to be approved, and if demand is low, you might not get permission at all. You’ll still be able to sell, but not to someone seeking citizenship. That could result in a significantly lower price than you bargained for.
In addition, qualifying real estate investments are often sold as partnership units; in most cases securities that aren’t registered with the Securities & Exchange Commission. That means you won’t be able to sell your partnership interest to a U.S. person without going through the expensive process of hiring a securities lawyer to prepare a private offering to try to sell it. For that reason, we generally suggest U.S. persons purchase only “fee-simple” (i.e., with one owner) real estate outside the U.S.
What’s the Best Program for You?
With entry points starting at $200,000, it’s hard to beat the Caribbean CBI programs for a relatively low-cost path to a second passport through a real estate investment. But if you want to live full-time in Europe, it’s worth considering the higher-cost options available there. Our personal favorite is Portugal since you can acquire citizenship after six years in an E.U. country without a requirement for extended physical residence and only basic language skills. But if you want E.U. citizenship more quickly, the considerably more expensive Maltese CBI program is worth considering.
Editor’s Note: For 30 years, Mark Nestmann has helped more than 15,000 customers and clients successfully protect their assets and financial privacy overseas. He is the author of The Lifeboat Strategy, widely considered the gold standard in American-client asset protection and financial privacy resources. See: Nestmann.com/ilspecial for an exclusive offer for IL readers.
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