No more secrets in luxury real estate: US to regulate use of LLCs in Manhattan, Miami
All-cash purchases of luxury apartments by anonymous shell companies, increasingly common in high-end real estate deals, may soon be a thing of the past.
The U.S. Treasury Department is rolling out a program in New York and Miami to monitor those transactions and identify buyers, starting in New York and Miami, the New York Times reported.
“We are concerned about the possibility that dirty money is being put into luxury real estate,” the Treasury’s Jennifer Shasky Calvery told the newspaper. “We think some of the bigger risk is around the least transparent transactions.”
In transactions above $3 million, the government will require title insurance companies to discover buyers’ names and submit the information to a database that Treasury will make available to law enforcement.
In Manhattan, 1,045 apartments were sold above that price level in the second half of 2015, worth about $6.5 billion in total, according to data from PropertyShark.
It will be the first time the federal government has required this sort of disclosure in real estate transactions, though the city launched its own attempted to lift the “veil of secrecy” around luxury real estate buys earlier this year.
The program will run on a trial basis from March through August of this year. It will become permanent nationwide if officials discover sufficient evidence of money laundering in the data.
Just last week, an entity called LLC, 432 PARKVIEW became the first buyer at Harry Macklowe’s 432 Park Avenue in Midtown. It bought a three-bedroom, 4,000-square-foot unit for $18.1 million. [NYT] – Ariel Stulberg
Correction: A previous version of this article said that 1,045 Manhattan apartments above $3 million were sold in 2015. That was actually the number sold in the second half of 2015.