Business Today examined on 5 October 2026 how India's six listed REITs give investors exposure to office buildings without owning the buildings themselves. The same arrangement sits behind most private U.S. real estate. There, the building usually belongs to a real estate SPV, or special purpose vehicle, and the investor owns an interest in one or more companies above it.
That chain of companies decides what an Indian investor actually holds, how the income is taxed, which forms arrive each year and who makes decisions about the property. It deserves attention before the city, the tenant or the sponsor's presentation, because it shapes every later step. The complete guide to investing in U.S. real estate from India sets out the wider process, and this article looks closely at the entity layer inside it.
What Is a Real Estate SPV?
A special purpose vehicle is a company set up for one narrow job, which in property usually means owning a single building or a single deal. In the U.S., it is most often a limited liability company, or LLC, formed under the law of one state. The SPV is the legal owner of the property. It signs the mortgage, the leases and the service contracts, and it collects the rent.
The SPV's operating agreement works much like a company's articles. It names a manager and sets out what the investors in the entity can and cannot do. The manager is usually the sponsor, meaning the real estate firm that finds, finances and runs the property. Investors typically have economic rights, such as a share of distributions and sale proceeds, but little say over daily decisions.
The idea is familiar in India too. SEBI's framework for small and medium REITs requires each scheme to hold its properties through SPVs, with the SPV alone owning the assets, according to SEBI's frequently asked questions on SM REITs. A U.S. private deal uses the same building block, although it falls outside SEBI oversight and the investor's rights come from contracts rather than Indian regulation.
Why Each U.S. Property Usually Sits in Its Own Entity
Placing one property in one entity keeps that property's loan, leases and legal claims inside a single box. If a deal runs into trouble, its lender and creditors look to that SPV and its building, not to other properties the sponsor manages. Lenders on U.S. commercial property often ask for this separation before they will lend.
That separation has a clear limit. It shields other deals from this deal's problems, but it does nothing for the money an investor has placed in this deal. If the property loses tenants or cannot repay its loan, the equity in that SPV can lose value or be wiped out entirely. The structure answers the question of where a problem stays, not whether a problem happens.
How Indian Investors Sit Above the Real Estate SPV
An Indian resident rarely becomes a member of the property LLC itself. A U.S. LLC with several owners is usually taxed as a partnership, which would draw each foreign member into U.S. tax filings on their share of the property's income. To keep that burden in one place, Indian and other offshore investors typically invest through a U.S. corporation, often called a blocker, which in turn holds the interest in the property SPV.
The blocker files its own U.S. return and pays U.S. corporate tax on its share of the property's income. When it passes cash to its shareholders, the payment is generally a dividend, U.S. tax is withheld at source, and the investor typically receives Form 1042-S, the U.S. information return that reports the payment and the tax withheld. The U.S. real estate tax guide for Indian investors explains how that income is then treated in India.
The result is that the investor's legal asset is a shareholding in a U.S. corporation. The investor's name does not appear on the property deed, and the investor does not sign the loan. Every right the investor has, from receiving distributions to voting on a sale, comes through the blocker's documents and the SPV's operating agreement.
What the Structure Decides on the Indian Side
Money reaches the blocker through the Liberalised Remittance Scheme, which allows a resident individual to send up to US$250,000 abroad in a financial year. The investor's authorised dealer bank reviews each transfer, collects Form A2 and confirms the purpose code, and the investment must also fit the overseas investment rules under FEMA. Raveum supports LRS-related remittance documentation, but the bank decides whether each remittance goes ahead.
Each year, the investor reports the dividend in the Indian return and can usually claim credit for the U.S. tax withheld under the India-U.S. tax treaty. A separate explainer covers how U.S. dividend tax applies to property distributions. The shareholding itself is a foreign asset, so it belongs in Schedule FA, the part of the return that discloses foreign assets.
The structure also matters at death. The IRS treats stock in a U.S. corporation as a U.S.-situated asset for a nonresident who is not a U.S. citizen, and an estate tax return is required when such assets exceed US$60,000 at death. Shares in a blocker fall inside that rule, which is why the U.S. estate tax guide for global investors belongs in the same conversation with a family's CA.
Risks and Limits of Owning Through an SPV
The structure changes how an investment is held, not whether it can lose money. Investors can lose some or all of their capital if the property falls in value, tenants leave or the loan cannot be refinanced. Debt sits at the SPV level and the lender is paid before any equity holder, so leverage magnifies losses as well as gains.
Control is limited. The sponsor usually decides when to refinance, when to sell and whether to pay distributions, and distributions can be reduced or stopped. Shares in a private blocker have no public market, so an investor should expect to stay in until the property is sold, as the explainer on liquidity before a U.S. property is sold sets out.
There are further costs and exposures. Corporate tax and U.S. withholding both come out before cash reaches India, and the rupee value of every distribution moves with the exchange rate. A single-property SPV also concentrates risk in one building, one market and one sponsor, so spreading money across several deals is a separate decision from checking the structure of any one of them.
Questions Worth Asking Before Committing Money
A short set of questions brings the structure into view before any money leaves India. Each one can be answered from the offering documents, and a gap in the answers is itself useful information.
- Which entity will the investor hold shares in, where is it formed, and what does it own?
- Who manages the property SPV, and which decisions can the manager take without investor approval?
- How much debt sits on the property, and when does the loan need to be repaid or refinanced?
- Which U.S. tax forms will the investor receive, and when do they usually arrive?
- Can the shares be transferred before the property is sold, and on what conditions?
- Where are the operating agreement, the offering documents and the fee terms, and has the investor's CA read them?
Ownership Runs Through a Chain of Companies
In a private U.S. property deal, an Indian investor's asset is a shareholding, and the building sits two steps away from it. The property belongs to a real estate SPV, the SPV sits under a blocker corporation, and the investor's rights travel down that chain through documents rather than a deed.
Read that way, the structure stops being legal background and becomes the first thing to check. It explains why U.S. tax is withheld before cash arrives, why the shares are hard to sell early, why the U.S. estate tax rule applies and why the sponsor's decisions carry so much weight. The guide to investing in U.S. real estate from India walks through the full process in order. Eligible investors can review how investing in U.S. real estate from India works on Raveum, including the property, sponsor, ownership structure, fees, risks and offering documents for each opportunity.
Frequently Asked Questions
What is an SPV in real estate?
An SPV in real estate is a company created to own one property or one deal. In the U.S., it is usually a limited liability company formed under state law. The SPV holds the building, signs the loan and leases and collects the rent, while investors own interests in it or in a company above it.
Do investors own the property in a real estate SPV?
Not in their own name. The SPV is the legal owner of the building. Indian investors in U.S. deals usually hold shares in a U.S. corporation, often called a blocker, which holds the interest in the SPV. Your rights come from the documents of those entities rather than from the property deed.
Can an Indian resident invest in a U.S. LLC under LRS?
An Indian resident can send money abroad under the Liberalised Remittance Scheme, up to US$250,000 in a financial year, but the investment must also fit FEMA's overseas investment rules. Your authorised dealer bank reviews each transfer. Many U.S. deals place a blocker corporation between Indian investors and the property LLC.
Is investing through a real estate SPV safe?
No structure makes a property investment safe. An SPV keeps one property's debts apart from other deals, but your capital in that deal can still be lost if the property falls in value, tenants leave or the loan cannot be repaid. Distributions can stop, and shares are usually hard to sell early.
How is income from a U.S. blocker corporation taxed in India?
Cash paid by a blocker is generally a dividend. U.S. tax is withheld first and reported on Form 1042-S. In India, the dividend is taxed as income in your return, and the U.S. tax withheld can usually be claimed as a foreign tax credit under the India-U.S. tax treaty, with help from your CA.
Does U.S. estate tax apply to shares in a U.S. real estate corporation?
It can. The IRS treats stock in a U.S. corporation as a U.S.-situated asset for nonresidents who are not U.S. citizens. If such assets exceed US$60,000 at death, the executor must file a U.S. estate tax return, and tax may be due depending on the value of the estate.
This article is for general education only and is not investment, tax or legal advice. Rules change and depend on individual circumstances. Investing in private real estate involves risk, including loss of capital, illiquidity, falling property values, distributions not being paid and currency movements. Participation is limited to non-U.S. persons under SEC Regulation S and verified U.S. accredited investors under Regulation D Rule 506(c), and offerings on Raveum are not open to the general public.
