New Real Estate Reporting Rule

New real estate reporting rule affecting buyers

The Financial Crimes Enforcement Network (FinCEN) has issued a rule intended to ferret out and deter money laundering in the U.S. residential real estate market. The rule requires certain information to be reported to FinCEN following most non-financed transfers of residential real estate, even if the transfer is a gift, when (1) at least one of the new owners is a legal entity or a trust, and (2) a reporting exemption does not apply. The impetus for the rule is the increasing use of business entities and trusts to conceal both the proceeds of criminal activities and the identities of the individuals involved.

The rule becomes effective December 1, 2025. The reporting form is not yet developed, although we know it will require personal information (called “beneficial ownership information”) about all persons who exercise “substantial control” over a transferee entity or who own at least 25 percent of the entity’s ownership interest.

In the case of a transferee trust, the reporting form will require beneficial ownership information about anyone (1) who is a trustee of the trust, (2) who is empowered to withdraw or dispose of the trust assets, (3) who is the sole permissible recipient of income and principal from the transferee trust, (4) who is a settlor with power to revoke the trust, or (5) who is the beneficial owner of an entity or trust that holds any of the four above-listed positions under the trust.

Reporting exemptions apply to transfers deemed to be lower risk, such as transfers from an individual to a trust of which that individual is the settlor, or transfers necessitated by divorce or death. Exemptions also apply if the new owner finances the purchase through a lender, such as a bank or credit union, required to report the transaction under the Bank Secrecy Act.

The attorneys at Wright Beamer will keep you posted as more information becomes available. In the meantime, we can be reached at 248.477.6300 if you have any questions or concerns.