Real property is a cyclical enterprise. Markets crash. Deals sour. But tough landings are uncommon for a savvy belongings magnate, thanks to the U.S. Tax Code.
Take Harry Macklowe, a New York City developer. Macklowe, 81, hasn’t paid profits tax for the reason that the Nineteen Eighties, according to a courtroom opinion in his divorce court cases issued in December. The ruling, which also divided luxurious homes and an artwork series really worth more than $650 million between Macklowe and his ex-spouse, Linda, doesn’t suggest the couple did whatever wrong to avoid paying earnings taxes. Rather, it highlights the unique perks to be had to belongings traders in the U.S.—benefits that have accelerated under the tax law signed in 2017 by Donald Trump, America’s real estate developer president. “The real property enterprise is notorious for throwing off masses of deductions, and actual property builders are infamous for paying very few taxes,” says Steven Rosenthal, a senior fellow with the Urban-Brookings Tax Policy Center. “As Leona Helmsley said, ‘Only the little human beings pay taxes.’ ”
As Democrats in Congress seek Trump’s tax returns, Macklowe’s divorce case offers a glimpse at what they might discover. Real property moguls have a range of techniques to be had to reduce or delay their tax liabilities. Harry Macklowe didn’t reply to a listing of questions forwarded to him by his spokesman. Linda Macklowe declined to remark.
Over a half-century of investing in New York real property, Macklowe built a reputation as a dealmaker inclined to take huge risks. With Linda, he spun real estate income into an art collection with masses of pieces, including Andy Warhol’s Nine Marilyns and sculptures, with the aid of Alberto Giacometti. In the Nineteen Eighties, Macklowe won notoriety after his organization demolished single-room occupancy buildings close to Times Square in the middle of the night; he constructed an inn at the website, named it after himself, then ended up surrendering the property to the lender some years later.
