Real property is a cyclical commercial enterprise. Markets crash. Deals sour. But difficult landings are uncommon for a savvy belongings mogul, thanks to the U.S. Tax Code. Take Harry Macklowe, a New York City developer. Macklowe, 81, hasn’t paid income tax since the Nineteen Eighties, consistent with a court opinion in his divorce court cases issued in December. The ruling, which also divided luxury houses and an art collection worth more than $650 million among Macklowe and his ex-spouse, Linda, doesn’t suggest that the couple did anything wrong to keep away from paying income taxes. Rather, it highlights the special perks available to property buyers inside the U.S.—blessings that have extended under the tax law signed in 2017 with the aid of Donald Trump, America’s real estate developer president. “The real property enterprise is infamous for throwing off masses of deductions, and real property builders are notorious 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 people pay taxes.’ ”
As Democrats in Congress search for Trump’s tax returns, Macklowe’s divorce case provides a taste of what they could find. Real property moguls have a range of strategies available to reduce or postpone their tax liabilities. Harry Macklowe didn’t reply to a listing of questions forwarded to him through his spokesman. Linda Macklowe declined to comment.
Over more than half a century of investing in New York actual property, Macklowe constructed a reputation as a dealmaker willing to take big risks. With Linda, he spun real estate profits into an art series with hundreds of portions, including Andy Warhol’s Nine Marilyns and sculptures by Alberto Giacometti. In the Eighties, Macklowe received notoriety after his business enterprise demolished single-room occupancy buildings close to Times Square within the nighttime; he built a hotel on the site, named it after himself, then ended up surrendering the assets to the lender a few years later.
Macklowe rebuilt his commercial enterprise, shopping for the General Motors Building for $1.Four billion in 2003, and winning approval for growing an Apple Store below a transparent cube on the building’s Fifth Avenue plaza. In 2007, Blackstone Group LP bid to acquire a real estate investment accepted as true with Equity Office Properties Trust. As part of the deal, Blackstone sold seven New York office buildings to Macklowe, who financed the acquisition with $7 billion in debt. Within a year, the global financial disaster prevented him from refinancing the debt. He misplaced the residences’ manipulation, consistent with The Liar’s Ball, a book by Vicky Ward about Macklowe and the history of the General Motors Building.
