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New housing disclosure requirements increase transparency but add risk for property owners

August 19, 2015
Linda Robertson Platinum Accounts Executive

Linda Robertson
Platinum Accounts Executive

New rules that went into effect in New York City this spring make it much more difficult for buyers of residential real estate to shield their identities through an LLC or other opaque vehicle.

According to The New York Times, the de Blasio Administration wants to increase transparency and identify real estate owners who may be skirting taxes due to the city by claiming residency elsewhere, in particular a foreign country.

Beyond taxes, regulators say disclosure can help fight crime. Jennifer Shasky Calvery, director of the U.S. Treasury Department’s Financial Crimes Enforcement Network, said that such disclosure will close loopholes.

“Greater transparency of beneficial ownership information would make it morestatue-of-liberty-picture difficult for criminals to hide their purchases of luxury real estate through the use of shell companies.”

But the burden of disclosure will fall not just on criminals, but on all who purchase property in New York City under an LLC or other private company, the vast majority of whom are successful, high profile, and  merely seeking privacy.

We advise our well-known clients, such as celebrities with significant name recognition and C-level executives at large companies, to purchase property using an LLC. Doing so makes it much more difficult for the curious to find out where you live.

Unlike New York City, Connecticut does not have disclosure requirements on LLC’s that purchase real estate. Nutmeg state transactions remain protected. However, with federal pressure and the country’s largest city with the highest real property values having taken this step, disclosure requirements may be inevitable here and elsewhere.

Nonetheless, even with the new disclosure requirements, the other Risk Management benefits of purchasing in Manhattan using an LLC still hold. For example, an LLC protects your other assets from litigation that involves the property in question.

In  some northern Litchfield County towns, 6 of 10 homeowners are dual residents, very commonly with holdings in Manhattan and here. We created our Platinum Accounts Unit to service the needs of this special group. We understand the unique risks they face and have extensive expertise in managing risk for properties here, in the city, and other popular locales like Colorado, Florida, and Washington D.C.

Have questions about the best ways to manage risk in your real estate portfolio? Drop me a line.

Linda Robertson
Platinum Accounts Executive
lrobertson@foundersgrp.com

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