Eric Trump is turning a sweetheart deal from daddy into an eight-figure penthouse
What looked like a sweetheart deal from Donald Trump to his son Eric when it happened in 2016 is starting to look like a full-on giveaway. Trump the father sold Eric a pair of apartments for the under-market price of $350,000 apiece, less than half of what they’d previously been listed for. Obviously we don’t know whether Trump reported that deal as the gift it clearly was, since he won’t release his tax returns—though Trump did fail to mark the sale as being between relatives. Now, Eric is combining one of the two apartments with two others to create a penthouse, which could dramatically increase its value
In fact, the amount such a penthouse might sell for could be nearly three times what Eric paid for the component apartments and the work to combine them, which makes the tax questions on the deal even bigger:
The $350,000 deal he got from Trump “might not only have been a fire sale,” [Valparaiso University Law School tax professor David Herzig] said, “but if this is a key component that you would need to combine them together to make a penthouse, to get the requisite number of rooms, that actually means that this property should have been sold at a premium, not a discount.”
It’s not clear why Trump sold unit 14G to Eric for just $350,000, when he sold another unit, the 1,350-square-foot 14D, to Eric for $2 million in 2008. That was much closer to its likely market value.
If he had simply given the apartment to Eric for free, Trump could have incurred up to 40 percent tax on its market price. But the sale for $350,000 could have been arranged to look like a “fair market sale” and not a gift.
As the developer of the building, Trump had some leeway with how he priced unsold apartments. He could have demonstrated that the real value was very low if, for example, the apartment was still subject to city rent regulations or was in need of significant repairs. The apartment’s new function as the keystone for a penthouse, however, makes that a difficult case to argue, Herzig said.
It’s always possible that Trump has damaged the family brand enough that Eric will have trouble unloading an apartment in a building named Trump Parc East. But then again, he has a whole lot of leeway to make money with as good a bargain as daddy gave him. And when the Trumps are involved, it seems like there’s always someone looking to launder money through a luxury real estate purchase.
All in all, the most surprising thing here may be that Donald Trump gave even one of his kids this much of a deal.