HOT, HOT, HOT NYC!!!

Real estate in New York is so hot right now that developers can´t build fast enough, those available for sale are being purchased before you can say “trust”! The average number of days a property is on the market is 96, which is 46 percent lower than a year ago. However, the number of properties available for sale increased by 18 percent year over year. In other words the demand is much higher than supply at the moment, thus pushing property valuations higher and higher. And buyers are principally foreigners, especially Chinese, thanks to the affordability, increasing wealth and favorable exchange rates. Currently, there are measures in the United States to raise additional taxes to on foreigners who invest in real estate in the United States. The Foreign Investment Law of Property Tax, or FIRPTA, also known as Section 897, specifically says any gain recognized by a foreign person will be treated as if such gain is effectively connected with a trade or business. That means the IRS would levy an additional 10 percent of the purchase price. But guess what? There is a loophole!! The IRS determined that a foreign investor who enters into a total return swap that is tied to an index US of broad-based real estate shall be exempt from FIRPTA. And this explains why so many shell companies, such as New York Magazine recently published in its article “Stash Pads”, are in the public record as the purchaser, and not an individual's name. So what do you think will happen when this gap is closed, as expressed in whispered conversation by some on Capitol Hill? A real estate bargain!!! Like no other in what New Yorkers like to call, “the greatest city in the world”.