The Real Deal New York

There were more than 1,300 Manhattan apartments purchased anonymously last year

LLCs in the spotlight after Treasury announces new disclosure rules

January 28, 2016 08:00AM
By E.B. Solomont

The Treasury Dept. said it will begin tracking high-end anonymous buyers. But what will that mean for the market? (NYC shot credit Sergey Semenov)

(Photo: Sergey Semenov)

UPDATED: Jan. 28, 9:05 a.m.: The U.S. Treasury’s decision to track all-cash property purchases made through shell companies sent a shiver through the spine of the real estate industry earlier this month.

But just how many anonymous corporations are buying New York City real estate?

Anecdotal evidence suggests plenty, according to brokers and lawyers who say their clients value privacy and the legal protection afforded by purchasing property anonymously through a corporation.

As for hard numbers, there were 1,380 residential purchases at all price points in Manhattan made by LLC buyers in 2015, according to data compiled by StreetEasy for The Real Deal. That’s more than 50 percent of all residential LLC buyers across all five boroughs last year.

In 2010, there were just 861 LLC buyers in Manhattan, StreetEasy data show. Even five years ago, that accounted for nearly half of the 1,729 LLC deals.

Overall, Manhattan residential sales accounted for 37 percent of the 35,725 recorded sales last year.

Based on that volume, LLC purchases represented a small slice of the deal flow at 7.7 percent, slightly higher than 2010’s 4.9 percent.

But federal authorities still have high hopes for the new rule, a measure partly aimed at reining in the flow of foreign capital. “We are concerned about the possibility that dirty money is being put into luxury real estate,” Jennifer Shasky Calvery, a top Treasury official, said Jan. 13.

Under the new rule, title insurance companies will be required to disclose the identity of buyers who purchase Manhattan real estate priced at $3 million or more in cash through a shell company.

Sources told TRD, however, that buyers who want to remain anonymous will be able to do so by jumping through one of several financial loopholes to the provision, such as utilizing a straw buyer or setting up a trust. The new rule takes effect in March.

Correction: The headline on a previous version of this story incorrectly characterized the buyers purchasing through LLCs.

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