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How deadbeat landlords are fueling the housing crisis by tax evasion

Stalled landlordsare fueling a nationwide housing crisis by refusing to pay property taxes. As a result, experts say, houses are being removed from the market, reducing supply.

U.S. property law allows landlords to hide their identities behind limited liability companies (LLCs), thus avoiding legal liability in the event of property devastationan expert told his The Hill.

The landlord takes advantage of her LLC by simply refusing to pay property taxes and returning the property to the city.This reduces supply in areas of high demand.

Matthew Desmond, a professor of sociology at Princeton University, told the Senate Committee on Banking, Housing and Urban Affairs on Tuesday, "LLC ownership is a deprivation of assets, a waiver of taxes, Furthermore, it is associated with completely leaving the asset, ”the research results show.

"I asked one of the landlords I stayed with in Milwaukee, and she said, 'What happened to this house I've been with for so long?' , she just stopped paying taxes and put it in foreclosure," Desmond said. 

Lawmakers from both sides of the aisle have expressed concern over the increase in home ownership by professional investors.
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It's a strategy that shouldn't be there, but it is for some landlords who use LLCs," he said. 

Members of Parliament have expressed concern aboutthe rising rate of property ownership by professional investors, a trend that is leading to skyrocketing rents.

Professional investors accounted for 28.1% of all single-family home purchases in February, a record high, according to real estate market data firm CoreLogic.

Prior to the pandemic, investors accounted for 14% of his home purchases, the company found.

A tight housing supply has caused property prices to soar, making it difficult for the average American to own a home.

Nationwide median home prices rose 13.4% year-on-year in June to $416,000. According to the National Association of Realtors, this is an all-time high according to his data dating back to 1999.

Experts say investors take advantage of LLC laws to throw properties into foreclosure, allowing them to skirt taxes.
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Lawmakers from both parties warned that LLCs would force investors to avoid transparency. Some have used U.S. LLC laws to launder ill-gotten gains that could otherwise be seized by foreign governments. said a legal expert.

"I represent the richest and most famous people in the world and I do not buy real estate unless it is in the name of an LLC, sometimes more than one LLC." You do it to keep it so people don't know who's buying it," New York-based real estate attorney Adam Leitman Bailey told The Hill.

"Bad methods allow people from different countries to buy property in another country and buy property in America."

Bailey said: added like They can do that by using his LLC and people won't be able to find out who they are. ''