A Story Relating To Some Aspect Of The U.S Government Are the Panama Papers Affecting the Miami Real Estate?

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Are the Panama Papers Affecting the Miami Real Estate?

The Panama Papers, the Miami real estate market and news stories that make an impact across the country. When the story of the Panama Papers broke, the world was shocked by the tricks used by rich people around the world to hide their wealth and avoid taxes. The story emerged after a group of investigative journalists from influential newspapers went to great lengths to uncover the scandal.

When they finally got their story, many were shocked. The Panama Papers saga exposed the secret dealings of a Panamanian firm known as Mossack Fonseca. The company was a favorite of the world’s billionaire and millionaire clients who wanted to create shell companies and offshore accounts to hide money from their governments.

There is a famous saying that rich people all over the world speak the same language. The release of information from the Panamanian firm has been proven. The list of clients included top entrepreneurs, politicians, celebrities and heads of criminal networks. When the full extent of the transaction was absorbed, a European leader was forced to leave office; Governments have launched investigations, and others have chosen to initiate damage control measures.

Closer to home, the US Treasury Department went to work immediately and began drafting rules for banks to reveal the identities of those behind shell companies. The department has set standards for closing offshore account opening.

The Miami real estate industry has been hit the hardest. The report detailed that some of the money used to buy overpriced condos came from people named on the list. It is worth noting that even before being mentioned in the Panama Papers, the Miami real estate industry was under investigation by the US government for alleged money laundering. Authorities were not comfortable with people buying significant numbers of condos and luxury properties in Miami with cash without a trace. Considering that some listings cost millions of rupees, it was curious how buyers could make cash transactions without any legal documentation.

Miami Florida at sunset, colorful skyline of illuminated buildings

The U.S. government has raised a red flag over the type of investment in Miami-Dade County and set up a system to track the source of money from buyers paying more than $1 million in cash. The initial concern of the authorities was that since the money did not go through the formal banking sector, it was considered suspicious. In 2015, about 53% of properties in the area were registered as cash sales.

When foreigners bought $6.1 billion worth of properties in Palm Beach, Broward and Miami-Dade, there was much skepticism about the source of the funds. Much of the money was thought to represent capital flight from Latin American companies. When the real identity of the property owners came out, it was a shock to the industry players. Paulo Alves Pereira, a Brazilian politician, and property developer is one of the names. He was discovered as the original owner of Mateus 5. Paulo resigned as governor of Brasilia a few years ago due to corruption allegations. When the Miami Herald decided to investigate the report further, it found at least nineteen foreign nationals who owned properties in Miami featured in the Panama Papers. These nineteen persons are suspected to be involved in fraud, bribery and tax evasion back home. The investigation also found that many Brazilian clients who used the services of a particular local real estate attorney were of questionable backgrounds. Most were politicians, politically connected persons and judges. The newspaper found that the Miami Association of Realtors held an event to advise their investors on how to go about the new tax rules introduced by the government.

It is easy for foreigners to buy property in Miami using a shadow legal entity. Secret trusts, limited liability corporations, and offshore companies can buy any property in Miami without any problems. There is nothing illegal about the system as long as businesses pay taxes and declare their assets. Foreign nationals who invest between $500 and $1 million in US projects have the opportunity to become US citizens through the EB-5 visa program, which is also of great interest to Latin American citizens.

While many factors have contributed to the recent downturn in the Miami condo market, the release of the Panama Papers has to be one factor. Foreign buyers are no longer able to do business as before. They find that many more questions are being asked than last year’s contract. At the same time, many Latin American companies are going through a rough patch economically and politically.

The Panama Papers may affect the prices of condos in Miami which may drop to affordable levels. At some point, the massive influx pushed property prices so high that they were unaffordable to locals. Rental prices can drop to affordable levels when owners of vacant condos choose to lower their rates to entice renters. 2016 saw the completion of many new developments and the market continues to reach saturation point.

Investors in new developments are now choosing to convert them into rental properties until the market adjusts itself. For the moment, it seems the Panama Papers’ influence has tarnished the image of Miami and its luxury condos. Whether the revelations will have a significant impact on the industry remains to be seen. Authorities will also look closely at property deals executed in Miami that involve foreigners and cash. The impact of the Panama Papers has left its mark for years to come.

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