The US Treasury Department has rolled out a program in New York and Miami that will closely monitor all-cash purchases of luxury apartments.
The said program requires the identification of anonymous buyers involved in transactions about $3 million. Title insurance companies are now obligated to track down the name of their buyers and submit the information to a database that the Treasury Department will make available to law enforcement.
"We are concerned about the possibility that dirty money is being put into luxury real estate," explained Jennifer Shasky Calvery from the department. "We think some of the bigger risk is around the least transparent transactions."
The Treasury Department's newest program will run on a trial basis from March through August 2016. Once officials discover sufficient evidence that laundered money is being invested into luxury real estate, the program will be implemented nationwide.
This is the first time that the federal government has mandated the full disclosure of luxury real estate transactions although New York had already launched an attempt to lift the "veil of secrecy" around luxury real estate transactions earlier this year.
The goal of New York's increased transparency program is to find property owners who evade paying city income taxes by declaring that they legally reside outside of the city. According to the city's data, about 89,000 condos and co-ops are owned by people whose primary residence is outside of New York.
However, the city's initiative elicited negative criticism from real estate professionals. "I think it's an unfair, inappropriate position for the Department of Finance to say to people who invest in real estate, 'Gotcha,'" said REBNY Member and attorney Jay Neveloff. "There's no doubt there are bad people who buy real estate with money they've gotten from criminal activities. It's got to be a tiny minority."
