The Treasury Department will begin tracking sales of high-end real estate in two of the country’s most expensive markets—Miami and Manhattan (Harlem To Houston)—to try to crack down on money laundering CrainsNY writes.
The department’s Financial Crimes Enforcement Network said Wednesday that it will temporarily require certain title companies to identify individuals behind companies that buy properties exceeding $3 million in these two markets with all-cash transactions.
The government said it’s concerned that some of these real estate deals are made by corrupt foreign government officials or international criminals who use expensive real estate to launder dirty money. By using holding companies, some buyers may be able to disguise their identities.
The disclosure requirements would apply for 180 days beginning in March, according to the announcement. Under federal law, the government can demand these geographically targeted disclosures for up to six months but can then seek an extension.
High-end home prices in both Manhattan and Miami have soared over the past year. The median Manhattan home sold for $1.15 million at the close of 2015—a 17.3% leap from a year ago, according to the real estate brokerage Douglas Elliman.
That price put it at highs last glimpsed before the financial crisis erupted in 2008. The median sales price for a luxury unit in Manhattan was $6 million, a 25% jump from a year ago. Nearly half the purchases were all-cash.
Douglas Elliman reported that the entry point for luxury single-family homes in Miami Beach exceeds $6 million. Buyers are also flocking to the chic condo towers that increasingly line the region’s most expensive avenues.
Of the $100 billion spent on real estate transactions in Florida last year, nearly a quarter came from international buyers, according to the National Association of Realtors. And 74% of those sales were all-cash. But most of those purchases would not qualify for the additional government disclosure
The housing industry is trying to gauge the impact of the required disclosures.
“It’s painting the high-end segment as having overall treachery, and that’s unfortunate,” said Jonathan Miller, chief executive at the appraiser Miller Samuel. “It’s certainly not helpful to the high end of the market because it adds another level of complication to a transaction.”
Still, Miller said the impact is likely to be minor in the long term.
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