The changing tax laws are expected to help drive up the number of private equity funds, hedge funds and other Wall Streeters fleeing New York for South Florida, especially Palm Beach.
Section 457A of the Internal Revenue Code, which was recently enacted, will require hedge fund managers to move all fees deferred before 2009 and all related earnings out of offshore accounts into U.S. accounts by 2017. A manager who lives in Florida will pay much less in state taxes on the money compared to New York.
Roughly 70 private equity funds and hedge funds are based in South Florida, Dujour reported. Most of them arrived there between 2012 and now.
Kelly Smallridge, CEO and president of the Palm Beach Business Development Board, is leading an initiative to inform managers of the tax benefits so that they move to Palm Beach or stay there. Kayne Anderson Real Estate Advisors, for example, relocated from Armonk, N.Y., to Florida last summer.
“There was a fair amount of trepidation,” Al Rabil III, CEO of Kayne Anderson Real Estate Advisors, told Dujour. “But once everybody got past the stereotypes and actually came and looked, that changed.” [Dujour] — Mark Maurer