In late September, President Trump and his wife Melania became the latest New Yorkers to relocate to Florida. The state has long been a refuge for business moguls, celebrities and athletes who are keen to protect their assets from looming threats.
On the surface, Trump’s decision to move his permanent residence from Trump Tower to Mar-a-Lago appears to be motivated by the tax benefits he would reap.
Because of a somewhat obscure state rule, the move down South could provide a critical safeguard from creditors and lawsuits. And it may also give him a boost politically in Florida, a state he likely needs to win in 2020 if he’s to hold onto the presidency.
But the move to claim residency in Florida may be more complicated than it appears, legal experts told The Real Deal.
Six months and a day
First, Trump has to establish that he resides in South Florida for at least six months a year. This includes his time traveling on his plane and going to meetings in New York City, said Anthony de Yurre, a real estate attorney with Bilzin Sumberg in Miami.
“Really, what it boils down to is you have to spend more time here than anywhere else,” said de Yurre. “How many days are you physically going to be here?
Since his inauguration, Trump has spent 99 days at Mar-a-Lago, and only 20 days at Trump Tower, NBC News reported.
….in New York, and another reason they are leaving. Taxes and energy costs are way too high, Upstate is being allowed to die as other nearby states frack & drill for Gold (oil) while reducing taxes & creating jobs by the thousands. NYC is getting dirty & unsafe again, as….
— Donald J. Trump (@realDonaldTrump) November 1, 2019
The Trumps changed their residency by filing a document known as declaration of domicile in Palm Beach County. Sebastian Jaramillo, a real estate attorney with Wolfe | Pincavage in Miami, said the document is not the way most people would declare residency in Florida. But that the declaration nonetheless bolsters Trump’s argument that he is a Florida resident.
“This is not something that gets recorded very often,” said Jaramillo. “This is probably the only thing that he could do that says ‘I am a resident of Florida.’”
Eugene Pollingue, an attorney with Saul Ewing Arnstein & Lehr, said that some residents can’t meet the six month and one day rule, which is where the “teddy bear test” comes in. In other words, where the person considers their true home.
“The real test is what is your center of gravity,” Pollingue said. “Where are your doctors, your lawyers? What church do you belong to? Where is your car registered? … In terms of Donald Trump, what is his teddy bear? Is it Mar-a-Lago? Sometimes you can’t really meet that test.”
Home sweet Homestead exemption
If Trump moves to claim homestead exemption — a legal strategy used by Roger Ailes, OJ Simpson and Burt Reynolds to protect themselves from financial threat — on Mar-a-Lago or any other property in Florida, the portion of the waterfront resort that he chooses to protect would be insulated from any legal claims, including bankruptcy.
It’s “one-hundred percent exempt from creditors,” Pollingue said. “That in and of itself is tremendous. The laws are very strong in support of this homestead exemption. The Florida Supreme Court has actually said if you take your assets and it put it in your homestead … creditors can’t attack that even if you’re doing it to defraud your creditors.”
Claiming homestead is more difficult than it appears for Trump, since Florida law says that only a half acre in a municipality. Trump’s Mar-a-Lago resort, which has served as an unofficial White House II, totals over 17 acres, according to property records. It is also a commercial property, which are not allowed to claim homestead exemption.
In this case, Trump would have to divide a portion of the property to total less than half an acre or build a house on the new property, according to Jaramillo.
Read my lips: Far fewer taxes
The most obvious draw for Trump is the taxes, or lack thereof. Florida has no state income tax, no inheritance tax, and no estate tax. It’s the antithesis of New York.
Florida’s lack of state income tax in particular has long drawn residents from other states. Trump should know. His 2017 federal tax law, which capped the amount of state and local taxes homeowners could deduct each year at $10,000, damaged the housing markets in high-tax states like New York.
But it has been a boon for Florida, which has seen a spike in out-of-state buyers closing on luxury real estate. Brokerages and developers increasingly target these buyers, particularly as the pool of foreign buyers dries up.
Some of Trump’s business associates and friends have already made the move to Florida. Jamie LeFrak, who is the son of the president’s close friend Richard LeFrak, paid $19.6 million for the mansion at 4567 Pine Tree Drive in April. Harrison LeFrak, Richard’s other son, paid over $10 million for a penthouse at the ultra-luxury Four Seasons Residences at the Surf Club in Surfside.
The billionaire investor and corporate raider Carl Icahn, whom Trump referred to as a “very dear friend,” recently announced that he’s planning to relocate his investment firm from Manhattan to Miami. And this week, Icahn’s stepdaughter purchased a $7.3 million home in Golden Beach.
Trump made his career in real estate and left his sons, Eric and Donald Jr., to run the company when he left for the White House. If he decides to get back into the real estate game after he leaves office, he could save his employees some taxes like his friend Icahn by moving his operation near his prized Mar-a-Lago and Trump Doral resorts.
The post With move to Mar-a-Lago, Trump could use Florida real estate law to protect himself from creditors appeared first on The Real Deal Los Angeles.
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