The United States is one of the deepest and most stable real estate markets in the world. But for a Latin American investor, investing there has traditionally meant running into a wall of accountants, forms, and taxes that nobody explained before you started.
The concept: tax friction and illiquidity
Tax friction is everything your investment loses along the way to meeting tax obligations in another jurisdiction: accountant fees, withholdings, filings, and time. Illiquidity is how hard it is to turn that investment back into cash when you need it.
Neither one shows up in the return advertised on the cover. Both affect what you actually keep.
Example: of tax friction: a 10% advertised return that, after USD $1,500 in accountant fees and a 30% withholding, lands closer to 6%. Of illiquidity: you need the money in March and the contract only lets you out when the project sells, in 2029.
The barriers of US platforms
Institutional platforms such as CrowdStreet, EquityMultiple, or Pacaso — which offers co-ownership of luxury vacation homes — present large barriers for the small foreign investor.
In plain words: the ticket is the minimum amount you need to get in, fee drag is how much of your return the fees eat, and the IRS is the US tax authority. Example: if the ticket is USD $10,000, USD $2,000 does not get you in no matter how much you want it; and if the project returns 10% but you pay 2% a year plus 30% of the profit, you end up nearer 5.6%.
- Capital barriers: average tickets on US corporate platforms start around USD $10,000, and in the extreme luxury segment — buying 1/8 fractions of a property — the amounts are far higher.
- "Phantom income" and the IRS: these platforms usually send you a tax document called a Schedule K-1, which requires you to pay US taxes on gains the property generated even if the platform did not distribute that cash to you that year.
- Fees that eat the return: many charge an annual management fee of 1% to 2%, plus a share of your profits that can reach 30%.
What Circular Urban adds: the structural bridge
Circular Urban structures its US projects through local companies (SAS). In practice, that means you do not deal directly with the IRS or with the K-1 headache: you pay taxes locally, on dividends and gains you actually received.
In plain words: a SAS (simplified stock corporation) is the most common company type in Colombia, and phantom income is being taxed on money that was never paid out to you. Example: the US house is not on the deed under your name: it is owned by a company, and you own a piece of that company. So if the property earned USD $1,000 and reinvested all of it without paying you, you are not filing in the US on $100 you never saw.
On top of that comes a zero structuring cost policy at entry, with no fixed annual management fees eroding your capital year after year. Your money goes entirely to work for you.
Comparison table: traditional US platforms vs. Circular Urban
| Feature | US corporate platforms | Circular Urban |
|---|---|---|
| Tax complexity | High (requires dealing with the IRS and Schedule K-1) | Low (simplified local taxation through a SAS) |
| "Phantom income" risk | High (taxes on money never received) | Low (taxed on dividends and gains actually received) |
| Fees (fee drag) | High (annual management fee + success share) | Zero initial structuring costs for the user |
| Minimum entry amount | Very high (usually USD $10,000 or more in luxury) | Very accessible (USD $50) |
What to check before investing abroad
When you evaluate any international platform, ask for three things in writing: who files taxes and with which authority, what fees are charged and when, and how and how quickly you can exit. If any of the three is unclear, the return is unclear too.
What to weigh on our side
Investing through a local company means you are not the direct titleholder of the US property: you are a shareholder in the company that owns it. You gain tax simplicity and give up the direct link to the title, so the soundness of the corporate structure comes to matter as much as the soundness of the building.
Related links
- Circular Urban investment projects
- Lending to companies or owning dollar-denominated assets
- The luxury mirage and the Airbnb rush
- What Circular Urban is and how it helps you invest
- Financial diagnostic: why do it before investing
This content is educational and is not financial, legal, or tax advice. The terms of each platform can change; check their current information before deciding and talk to your own advisor.
Published by
María Camila Becerra Cabrales