3 ms·

It sounds like there is more to this story than just some companies (or corrupt officials behind them) buying and selling the property in London. Could it be th

It sounds like there is more to this story than just some companies (or corrupt officials behind them) buying and selling the property in London. Could it be that US has found out many Russians seem to own property in UK but there is no way to coerce them in any other legal way?

toyg 8y ago
> US has found out many Russians seem to own property in UK Nah, it has been widespread knowledge for decades now. When Roman Abramovich bought Chelsea FC in 2003, the phenomenon was already well-known. London has been Oligarch Central pretty much since the Eltsin days. No, the real issue is that the UK government continues to struggle under public debt. Since 2010 they've cut every expense they can cut, so now they're trying to raise taxes. One of the avenues for new revenue (eh) is to close all the well-documented tax-code loopholes; and the most classic one is where you create Company X from a tax haven, make it buy property in London, then sell the whole company, bypassing all taxes that should be triggered by property sales. That's what this new law is really supposed to fight. It's actually not a terrible idea, and I say that as someone who actively despises the current government. Obviously it will likely end up favouring the sort of old-money connections that the Tory party naturally represents, people who cannot hide their wealth because they've literally owned most of the country for centuries; but if it brings home some much-needed cash and stems a bit the relentless flow of dirty money that keeps London fat and arrogant, so be it.
- ghshephard 8y ago
  I wonder if you could combine that approach (having property owned by a company in a tax haven) with Prop-13 (in which property taxes grow very slowly if the property is not sold), and if anyone has ever done an assessment of how much property in California is owned by such entities.
  - google_censors 8y ago
    FinCEN is doing that in the larger metropolitan areas but they aren't publishing the data. They've been looking into real estate money laundering in the US on a larger scale for the past couple of years.
  - toast0 8y ago
    There's an exemption from reassessment if the California property is held in a real estate trust established by a financial institution, and the shares are sold. My understanding is that it's common for large commerical properties to be held in this fashion, such that they can be sold without triggering a reassessment. No tax haven required.
  - jeffwass 8y ago
    London doesn’t have the annual property taxes on held real estate that exist in the USA. There is a one-off stamp duty at purchase time. But if you buy a property, you can hold it without further taxes. *there is something called council tax, but it’s usually minimal, eg £2k max in many outer London boroughs, and in he case of rentals paid directly by renters.
  - jiveturkey 8y ago
    yes, that’s why a CA law was recently passed that when ownership of the real estate owning company changes hands, that is a) a change in ownership of the property and b) such changes must be reported to CA. unenforceable, eg there’s no way for CA to find out when foreign (non-CA owned) companies change hands, but at least the law is on the books.
    - ghshephard 8y ago
      And, of course the trivial work around that is to have the ownership of the real-estate owning entity be yet another offshore series of organizations. That way the principal owners of the entity which has title property never change, but the beneficial shareholders of those entities can be transferred. Etc, etc... I.E. For a property on 4th avenue, the entity which owns it is Starfish Inc. The shareholders of Starfish Inc, are Corp1, Corp2, and Corp3. The property on 4th avenue is never sold, it is always owned by one owner - Starfish Inc. Likewise, Starfish Inc is never sold, it is always owned by Corp1, Corp2, and Corp3. Add as many levels of indirection and obfuscation in as many tax-free havens as it's worth to avoid having to pay additional property taxes. Only the shares in Corp1, Corp2, and Corp3 are transferred/sold to new parties.
- james1071 8y ago
  You have no idea what you are talking about. This is not about raising revenue.

toyg 8y ago

> US has found out many Russians seem to own property in UK Nah, it has been widespread knowledge for decades now. When Roman Abramovich bought Chelsea FC in 2003, the phenomenon was already well-known. London has been Oligarch Central pretty much since the Eltsin days. No, the real issue is that the UK government continues to struggle under public debt. Since 2010 they've cut every expense they can cut, so now they're trying to raise taxes. One of the avenues for new revenue (eh) is to close all the well-documented tax-code loopholes; and the most classic one is where you create Company X from a tax haven, make it buy property in London, then sell the whole company, bypassing all taxes that should be triggered by property sales. That's what this new law is really supposed to fight. It's actually not a terrible idea, and I say that as someone who actively despises the current government. Obviously it will likely end up favouring the sort of old-money connections that the Tory party naturally represents, people who cannot hide their wealth because they've literally owned most of the country for centuries; but if it brings home some much-needed cash and stems a bit the relentless flow of dirty money that keeps London fat and arrogant, so be it.

ghshephard 8y ago
I wonder if you could combine that approach (having property owned by a company in a tax haven) with Prop-13 (in which property taxes grow very slowly if the property is not sold), and if anyone has ever done an assessment of how much property in California is owned by such entities.
- google_censors 8y ago
  FinCEN is doing that in the larger metropolitan areas but they aren't publishing the data. They've been looking into real estate money laundering in the US on a larger scale for the past couple of years.
- toast0 8y ago
  There's an exemption from reassessment if the California property is held in a real estate trust established by a financial institution, and the shares are sold. My understanding is that it's common for large commerical properties to be held in this fashion, such that they can be sold without triggering a reassessment. No tax haven required.
- jeffwass 8y ago
  London doesn’t have the annual property taxes on held real estate that exist in the USA. There is a one-off stamp duty at purchase time. But if you buy a property, you can hold it without further taxes. *there is something called council tax, but it’s usually minimal, eg £2k max in many outer London boroughs, and in he case of rentals paid directly by renters.
- jiveturkey 8y ago
  yes, that’s why a CA law was recently passed that when ownership of the real estate owning company changes hands, that is a) a change in ownership of the property and b) such changes must be reported to CA. unenforceable, eg there’s no way for CA to find out when foreign (non-CA owned) companies change hands, but at least the law is on the books.
  - ghshephard 8y ago
    And, of course the trivial work around that is to have the ownership of the real-estate owning entity be yet another offshore series of organizations. That way the principal owners of the entity which has title property never change, but the beneficial shareholders of those entities can be transferred. Etc, etc... I.E. For a property on 4th avenue, the entity which owns it is Starfish Inc. The shareholders of Starfish Inc, are Corp1, Corp2, and Corp3. The property on 4th avenue is never sold, it is always owned by one owner - Starfish Inc. Likewise, Starfish Inc is never sold, it is always owned by Corp1, Corp2, and Corp3. Add as many levels of indirection and obfuscation in as many tax-free havens as it's worth to avoid having to pay additional property taxes. Only the shares in Corp1, Corp2, and Corp3 are transferred/sold to new parties.
james1071 8y ago
You have no idea what you are talking about. This is not about raising revenue.