It has been announced that the Treasury Department’s Financial Crimes Enforcement Network will look for the individuals behind limited-liability companies' identity if they actually pay cash for their premium residential real estate. This measure will be effective in both Miami-Dade and Manhattan. Such measure is an attempt to stop money laundering, hence the request to name the true “beneficial owner” of the company. The risk is that it may discourage legitimate purchases or lower the interest in high-end sales on those markets.
However, most people tend to buy under LLCs for privacy purposes, not for illegal reasons. The concern is that it wouldn’t help the real estate market that is already cooling down. At a time when demand for Manhattan’s most-expensive homes is slipping high-end construction units pile up on the market. After peaking last year, resale prices have gone down since. In Miami-Dade too, the stronger dollar is turning away Latin American buyers while 36,000 new units are in the construction pipeline.
What if the measure hurt sales and drive investors to other locations such as Panama? Overseas buyers tend to find in Miami a haven from the financial turmoil of their home countries. They are, on the other hand, usually shy about disclosing their wealth.
Many deals in ultra-luxury towers are made by LLCs. Being under the scrutiny of the government might prevent people from closing some high-end purchases.
The disclosure rules will take effect on March 1 and expire on Aug. 27. Don’t worry too much though, it may not be able to go beyond what some developers already apply to their buyers when they simply do as much due diligence as possible.
In the meantime, have a look at the great Continuum condo in South Beach, while you still have some brigh days ahead