The story broke in The New York Times today, and it only affects Manhattan and Miami real estate right now... but get ready. The Feds are tired of cash buyers who hide their identities in “shell ownership” of luxury real estate. I, for one, am happy as it is so hard to chase down ownership of a property when it is in an LLC. But this could be a real game changer in those markets, and I will bet you a bottle of Veuve San Francisco is next: The Times also reports that 48% of the buyers in the Bay area used shell companies, whereas only 37% did in Miami, where the new rules will be effective beginning this March through August.
Treasury is essentially running a field test to see if they can capture scofflaws or major money stashing, and they plan to use title companies and mortgage companies to do so.
Since 2000, 44% of real estate sales over $5 million in the United States were to shell companies or, as I prefer to call them, LLCs. That came from what must have been a laborious investigative report by The New York Times. And that report may have influenced the folks in D.C. to implement this legislation — (more…)