A bill that would inadvertently reveal the identity of secretive condo buyers in New York City won’t force anonymous owners into the light after all, according to new guidance issued by New York state tax officials this week.
The clarification by the state’s Department of Taxation and Finance, which the Wall Street Journal first reported, follows bewilderment by the real estate industry over requirements that limited liability companies (LLCs) used to purchase condos and one-to-four family homes across the state must disclose the names and addresses of buyers.
The determination was the result of a law, which took effect in September, by Rockland County legislators who aimed to deter homeowners in their area from purchasing real estate through LLCs, after locals suspected new neighbors of illegally subdividing homes.
Industry insiders feared the law would have had major consequences for Manhattan’s real estate market, since purchasing property through a LLC is a common practice for celebrities, the ultra-rich, and anyone who wishes to keep their transactions secret for privacy or sometimes shady reasons.
“The Department’s initial understanding of the new law was generated based on the agency’s preliminary reading of the bill language and how it interacted with other relevant sections of the law,” said James Gazzale, a spokesperson for the state’s tax department. “Since that time, the bill sponsors have clarified their intent.”
The tax department offered new guidance on the law after the sponsors, State Senator James Skoufis and Assemblymember Ken Zebrowski, clarify the bill’s intent with state officials, according to Gazzale. The change puts to bed an issue The Real Estate Board of New York argued would “effectively kill real-estate finance,” the WSJ notes.
“The law is intended to apply to sales of a residential building with 1 to 4 dwellings, not the sale of individual condo units, and the guidance reflects that,” Gazzale stressed.