The new initiative of the US government to scrutinize and track down secret buyers of high-end properties in Manhattan and Miami-Dade County provides more bad news to luxury-home developers and brokers in the area.
The move will look into the all-cash purchases that involve shell companies like limited liabilities companies, also known as L.L.C.s, a recent report stated.
Jonathan Miller, president of New York-based appraiser Miller Samuel Inc., said, "Part of the large swath of people who purchase under LLCs do it for privacy -- celebrities, the wealthy -- and are not doing something illegal."
This is the first time that the federal government has required real estate companies to provide names behind all-cash transactions. This move is part of the US government's effort to crack down on money laundering in real estate. The treasury and federal law enforcement officials said they were putting greater resources into investigating luxury real estate sales that involve shell companies like L.L.C.s; partnerships; and other entities.
This initiative of the government was inspired, according to officials, by a series in The New York Times last year that looked into the increasing use of shell companies from foreign buyers seeking safe havens for their money in the US.
This government effort, however, won't be taken well by the buyers. Leonard Steinberg, president of New York Brokerage Compass, said, "I challenge them to walk one day in the shoes of a really famous person to know what it feels like to be hounded like an animal."
He added, "I've seen crazy paparazzi driving the wrong way down a one-way street just to get one stupid picture. Famous and rich people have children, too, and there's a level of protection that should be provided for these people."
The US government will be implementing this rule starting March 1 and will end on August 27. The Treasury Department will be collecting and analyzing the data. This is for safeguarding the financial system from the illicit use and from combat money laundering.
