Real Estate

It’s not at all unusual to encounter the owner of a New York business who dreams about leaving the State. The reasons often given for the desired move include, among others, the cost of doing business in New York, the State’s over-regulation of business and, probably most of all, its hostile tax environment.[i]

Lately, however, many more New Yorkers are talking about leaving the State. When you ask them why, they’ll recite a litany of familiar reasons, including those mentioned above. Generally, they seem sincere when they tell you they’re committed to doing whatever it takes to make a new home elsewhere.[ii] That is until you explain that “whatever it takes”[iii] requires (i) a lot of patience which, it turns out, many of these individuals do not have, (ii) a lot of effort, which they are unwilling to invest, and (iii) some sacrifice, which . . . well, forget about that.

A recent decision of New York’s Tax Appeals Tribunal[iv] illustrates one couple’s attempt at leaving the State. The Taxpayers (Husband and Wife) implemented many of the steps that must typically be taken to establish a change of domicile away from New York. Unfortunately for them, they were premature in thinking they had succeeded in doing so. Their missteps may serve as a lesson for others who genuinely aspire to one day describe themselves as “former New Yorkers.”[v]Continue Reading Escape from New York – It’s Not That Easy

An Extension of Credit

When one person lends money to another, the lender expects the borrower to repay the loan by an agreed-upon time. In order to compensate the lender for the borrower’s use of the lender’s money (the loan proceeds), the lender will require the borrower – at least in an arm’s length setting involving unrelated persons[i] – to pay interest on the amount borrowed.Continue Reading Exercised Appraisal Rights? Deferred Payment of Contingent Value? Don’t Forget Imputed Interest

Bon Voyage?

Over the last couple of years, several of my friends have become citizens of the country from which their parents emigrated to the U.S.[i]

Also during that period, some acquaintances took advantage of the so-called “golden visa” programs still being offered by a handful of European Union members.[ii]

A few clients gave up their U.S. citizenship, or their status as permanent residents of the U.S. (green card holders), and paid the resulting exit tax.[iii]Continue Reading Swapping Foreign Real Properties On a Tax Deferred Basis

Can It Be Undone?

How many times have you wished that you could undo something from your past, perhaps a string of incoherent statements made at a client dinner while slightly under the influence, or an expletive-filled email composed and sent in anger?[i] Often enough, right?

I’m certain that those among you who are business owners can probably recall several things that you have done over the years that you regretted at the time, but from which you learned the proverbial lesson.[ii] Still, there are probably moments you wish you could unwind the event or statement in question.Continue Reading Rescission, Repossession, Real Estate – The Three R’s of Unwinding a Sale

Hide and Seek

A national study released in 2015 reported that “nearly half the residential purchases of over $5 million were made by shell companies rather than named people.”[ii] Because shell companies could often be formed without disclosing the individuals that ultimately owned or controlled them (i.e., their beneficial owners), and could be used to conduct financial transactions without disclosing their true beneficial owners’ involvement, there was a concern that criminals were using such vehicles to launder money through the purchase of real estate and thereby hide, or at least obscure, the illicit origin of their funds. The report explained that many of these purchases were made in all-cash transactions; thus, no lender was involved and, so, the usual due diligence that accompanies a loan application was avoided.[iii]  Continue Reading NY’s LLC Transparency Act and NYC Real Estate – Albany Wants to Know the Secrets that You Keep[i]

What’s Next?

Do you feel as challenged as I do when someone asks you to explain the term “Bidenomics”?[i] I know that it is predicated upon the imposition of higher taxes on businesses and their owners, which have not yet materialized.[ii] However one defines it, the White House tells us that it’s working, which some folks say is a good thing.Continue Reading Sale of Mortgaged Property – Amount Realized or COD Income

“Don’t Come Around Here”[i]

There have been some interesting developments of late with respect to the ownership of real property in parts of the English-speaking world. For example, Canada has imposed a temporary ban on the purchase of such property by foreigners. In Australia, a foreigner has to be granted permission by a federal governmental body before they can purchase real estate. Florida is considering a ban on foreign ownership of residential and farm properties.

The principal rationale given by these jurisdictions for limiting foreign ownership of residential property within their boundaries: wealthy foreigners have been parking their cash in such properties and, in the process, have priced too many local residents out of the market. Continue Reading Foreign Individuals Holding U.S. Real Property, or Left Holding the Bag?

State of the “Union”
Did you watch the President’s state of the union address the other night? Was it as you expected? Were you hoping for something more? Were you disappointed? Did you find it informative? Maybe entertaining? Embarrassing?

Speaking for myself: yes, yes, yes, yes, no, somewhat, and definitely.[i]

Mind you, I wasn’t expecting much in the way of tax policy; after all, the GOP controls the House. That said, I did hope for more than yet another reference to a billionaires’ tax.[ii]Continue Reading Applying FIRPTA to Short Sales

The Housing Market[i]

During the first quarter of 2022, the housing market accounted for 16.7 percent of gross domestic product (“GDP”).[ii] This figure represents a return to historic norms following the substantial reduction in housing’s share of GDP after the Great Recession.

The reasons cited for the increase include the imbalance in supply and demand for housing, which itself resulted from the reduction in inventory following the 2007-2009 recession and the housing bubble burst[iii] and the recent wave of millennials who, encouraged by what has been until now a low interest rate environment created by the Federal Reserve in response to the pandemic,[iv] have been looking to purchase their first homes.[v]Continue Reading Either An Investor or a Dealer Be – That is the Question

Don’t Do It

There are certain generally accepted “dos and don’ts” of which almost every investor is certainly aware. For example, do not put all your eggs in one basket; if an investment seems too good to be true, stay away from it; take a long-term approach; etc. These guidelines are so obvious, they have become cliché.

However, based upon my recent experience, it seems too many investors in real property have yet to understand that, in the overwhelming majority of cases, they should not acquire real property in a corporation, even one that has elected to be treated as an S corporation. These investors and their successors will often pay the consequences of this misstep for many years.
Continue Reading An S Corporation’s Sale of Real Property Following the Death of Its Shareholder