New Disclosure Rules Required for Shell Companies Buying NYC Real Estate

In a step toward making high-end real estate sales more transparent, the de Blasio administration has put new disclosure requirements in effect for shell companies buying or selling property in New York City. Under the new mandate, the names of all members of the shell company must be disclosed to the city. Finance commissioner Jacques Jiha's decision to impose the new requirements was partly influenced by a series of New York Times articles examining the actions of LLCs in high-end New York real estate, the Times reports. The story noted that some recent LLC-sheltered international buyers have been the subject of government inquiries. The new rules are intended to help identify real estate owners who could be illegally avoiding city income taxes by claiming legal residency outside the city or the country. City officials worry the rules will not address other issues like failure of brokers, building managers and co-op boards to scrutinize buyers' backgrounds and money sources. Jay Neveloff, a lawyer and member of the board of governors of the Real Estate Board of New York, worries the new rule might infringe on buyers' privacy rights. Others don't think the rules went far enough, arguing that the true owners could just leave their names off the LLCs and add another layer of ownership. According to law, anyone with a NYC apartment who stays in the city for more than 183 days is a legal resident who must pay city income taxes. [NYT]