Are you thinking about purchasing luxury real estate in NYC? If so, you might have privacy concerns. Many high-net individuals want to remain anonymous when completing transactions like this. Is this a real possibility?
In 2021, congress passed a measure to end the anonymity of companies purchasing high-priced properties in areas like New York. This included various types of property including condominiums. The National Defense Authorization Act provides the treasury department with the ability to create and maintain a record of the true owners of businesses created in the US. This includes the owners of limited liability companies (L.L.Cs). The move was made after law enforcement officials including 2018 Manhattan District Attorney Cyrus Vance, Jr. repeatedly warned that the previous situation presented a desirable loophole for criminals.
While the new measure reportedly had a significant impact on the NYC property market, it removed the protection of L.L.C company owners across the U.S. However, despite the change in law, by taking the right steps, you can maintain your privacy when purchasing real estate.
How Can You Remain Anonymous Purchasing Property In NYC?
According to top NYC real estate attorney Pierre Debbas, it is possible to purchase a property and remain anonymous. To do this, you must create two L.L.Cs instead of one. The first will be added to the deed of the property. The second L.L.C will be the buyer as the sole member. A real estate attorney such as Pierre is appointed as the signatory for the second L.L.C. As such, the client’s name is never identified on the ownership of the property or as a signatory on any document. Thus, the anonymity of the buyer is effectively preserved.
Can You Remain Anonymous Using A Trust For The Purchase?
According to Pierre, it is possible to gain similar protection using a real estate trust. However, it is always best to have two layers of protection. This is why L.L.Cs are the best path to preserving your anonymity. Although more time-consuming this is also the most cost-effective solution.
What Steps Do You Need To Take?
An attorney can set up a deal to purchase a property where you will remain anonymous by using two L.L.Cs for you. The process will take a couple of days to organize. There is no annual compliance issue to worry about, however, you will need to cover the cost of an annual filing fee.
The only time the identity of the buyer is disclosed will be to the treasury department. This is for anti-money laundering purposes and ensures that the transaction is legal.
Who Can Access The Treasury Database?
The treasury database will include the:
- Beneficial owner’s name
- Address
- Date of birth
- Driver’s license
- Government I.D number
Crucially, the treasury database containing this information is only accessible to investigators and prosecutors. This is different from similar registries that have been set up in places like the UK which are free for anyone to access. Therefore, in NYC and the rest of the U.S, the buyer of a luxury property can remain publicly anonymous.
Other Considerations
You may be concerned about the issue of property tax when purchasing a luxury property anonymously in NYC. It is important to note that if you intend to live in the property as a primary residence, you will not be eligible for the primary annual real estate tax abatement of 17.5%.
However, there would be no impact when selling the property as, for tax purposes, it is a disregarded entity.
Are There Benefits To Purchasing Property In Your Name?
While privacy may be a top consideration for high-net individuals purchasing real estate, there are benefits to buying a property in your name. First, this option comes at a lower cost. There are fewer legal fees to worry about and liability insurance will be cheaper if the property is bought under your name instead of an L.L.C. It is also far easier to gain a mortgage through your name.
If you are buying through a trust, it is also worth noting that the rules regarding how much you can inject into a trust for estate planning purposes change frequently.
As you can see, while it involves certain legal requirements, it is possible to remain anonymous to the general public when purchasing property in NYC. If you are interested in this option, contact us to ensure that the process is completed correctly.
