FinCEN’s Residential Real Estate Reporting Rule

On March 1, 2026, the Financial Crimes Enforcement Network (“FinCEN”) enacted a new rule which provides that purchases of residential real estate made without financing in the name of an entity or trust will trigger a new federal reporting requirement to FinCEN. Residential real property, as defined in the rule, includes real property designed for occupancy by one to four families, land on which a transferee intends to build a structure designed for occupancy by one to four families, and shares in a cooperative housing corporation for which the underlying property is in the United States. In practical terms, if you acquire residential real property through an LLC, corporation, partnership, or trust and the purchase is not financed by a lender, information about the transaction and the individuals behind the purchasing entity must be reported to the federal government.

Historically, when residential real estate is purchased with financing, lenders are required to collect and verify information about borrowers under federal “Know Your Customer” (KYC) and anti-money laundering rules. Cash purchases, however, have not been subject to the same level of scrutiny. FinCEN’s Residential Real Estate Reporting Rule is intended to close that gap by requiring reporting in non-financed transactions where property is acquired by a legal entity or trust. The rule is designed to enhance transparency and address perceived money laundering risks associated with cash real estate purchases.

The reporting requirement generally applies when residential real property is transferred to a legal entity, such as an LLC, corporation, or partnership, or to a trust, and the purchase is made without financing. The rule does not apply to purchases by individuals taking title in their own names. Certain transfers are also excluded, including those arising from death, divorce, bankruptcy, court order, and like-kind exchanges.

Although a closing professional will submit the report, purchasers should expect that information about the property, the seller, and the purchasing entity or trust will be collected and reported to FinCEN, along with information identifying individuals representing the purchaser in the transaction and the beneficial owners of the purchasing entity or trust. The rule incorporates FinCEN’s beneficial ownership framework, under which individuals who exercise substantial control over an entity or who own or control 25 percent or more of its ownership interests must generally be disclosed. As a result, entity purchasers should anticipate providing detailed ownership and control information in connection with qualifying cash transactions.

This rule does not prohibit cash purchases through entities or trusts, but it does make them reportable. Clients planning to acquire residential real estate through an entity or trust without financing should expect additional information requests during the closing process and should factor these requirements into transaction timing. We will continue to monitor developments and any further guidance issued by FinCEN.