Fed renews crackdown on cash buyers of luxury real estate
The Treasury Department’s Financial Crimes Enforcement Network targeting order, which was set to expire this week, requires title insurance companies to disclose the true owners of companies that paid all cash for homes priced at $1 million and up in South Florida. The order becomes effective on Friday and will again last 180 days. It has been in effect in Miami-Dade County and Manhattan since March 2016.
In July, FinCEN expanded the tracking of high-end, all-cash luxury home purchased to include Broward and Palm Beach counties, as well as all boroughs of New York City, Los Angeles County, the San Francisco bay area, San Diego County and Bexar County in Texas, which includes San Antonio.
FinCEN said in Thursday’s announcement that in about 30 percent of the deals covered by the order, the buyer has been “subject of a previous suspicious activity report. Critics have said the reporting requirements are an ineffective method for catching money launderers, and the actual impact on luxury sales has been tough to determine in South Florida. Real estate agents have also said that the Panama Papers investigation had more of an effect on the market.
A seminar titled “Avoid the Treasury Trap with Foreign Buyers” held last year at the Miami Association of Realtors showed real estate agents how to help their foreign clients avoid the rules.
The American Land Title Association released a statement following Thursday’s announcement, praising the renewal. “Our members have collected this information for more than a year and the good news is those efforts appear to be beneficial to the government’s work identifying money laundering schemes and the illegal purchase of real estate,” said Michelle Korsmo, ALTA’s chief executive officer.
Curtesy of: Katherine Kallergis at TheRealDeal.com