Cash Deals in LLCs and Trusts Now Under Major FinCen Scrutiny

If you own property in an LLC, a living trust, or any other type of trust, or if you’re buying real estate with cash, this update is for you. 

On December 1, 2025, the U.S. Department of Treasury will enforce a new FinCEN rule that changes how real estate transactions are reported.

Here’s the bottom line:

• If you transfer or purchase property through an entity, real estate transfer, or a land trust transfer, the government will now require a Beneficial Ownership (BOI) filing.
  
• The reporting isn’t optional. If you fail to submit ownership interests, property transfers, and beneficial ownership details as required, you will face steep penalties.
  
• While this doesn’t end your privacy (these filings are not public record), it does mean law enforcement will have more insight into who owns the property.

And here’s the kicker—this could affect everything from avoiding probate with your trust, to how your Secretary of State filings tie into ownership records, to the tax benefits you’re expecting from your entities.

Watch my full video here: New FinCEN Rule Explained

What Exactly Is The FinCEN Real Estate Rule?

Starting December 1, 2025, the Financial Crimes Enforcement Network (FinCEN) requires reporting of certain non-financed residential real estate transactions. This rule covers any cash real estate purchase or privately financed deal where the buyer transfers title to an entity or trust.

This new rule is designed for anti-money laundering. For years, bad actors used bank accounts, shell LLCs, and trusts to move money through real estate transactions. FinCEN tested geographic targeting orders, and now they’re going nationwide.

As an investor, this means if you’re buying in an LLC, living trust real estate, or doing an entity real estate transfer, you can expect beneficial ownership filing requirements.

When Does The Rule Apply?

The effective date is December 1, 2025. The rule covers any qualifying transaction on or after that date. As with the Corporate Transparency Act (CTA), reporting deadlines may require you to provide information within 30 days or a similar timeframe.

Which Properties and Transactions Does the Rule Cover?

Covered real estate transactions include:

• Residential real estate (single-family homes, condos, co-ops, townhomes, and small apartments up to 4 units).
  
• Vacant land zoned for residential development.
  
• Mixed-use properties with a residential component.
  
• Transfers of ownership interests where a deed, stock certificate, or contract shows interest in the property.
  

And it only matters when the transfer is:

1. Non-financed (no bank loan from a regulated financial institution).
   
2. Into an entity or trust (LLC, land trust, living trust, partnership, etc.).
   
3. Not otherwise exempt.

Who Files The Report?

You won’t usually file this yourself. The reporting person is typically your:

• Title company
  
• Escrow or settlement agent
  
• Closing attorney
  

If you prepare and record the deed yourself without a title company, escrow officer, or attorney, there is technically no reporting person to file with FinCEN. That means the deal might not trigger the reporting requirement.

But here’s the catch: skipping the professional filing can backfire. Without a title or escrow company involved, you risk:

• Problems getting title insurance later (which protects you if ownership is challenged).
  
• If you file the deed incorrectly with the county, you can disrupt the recording and create legal headaches.
  

In other words, yes, doing it yourself might avoid the reporting rule, but it could also create bigger problems later on.

What Information Must You Report?

The information includes:

• Property details (address, price, how paid).
  
• The entity or trust’s legal info.
  
• The filing must include the names, dates of birth, citizenship, addresses, and tax identification numbers of all owners who hold 25% or more ownership or have control.
  
• For trusts: settlors, trustees, sometimes beneficiaries.
  
• Authorized signers for the transaction.

This requirement works like a BOI filing under the Corporate Transparency Act, but it applies to real estate transactions rather than only to creating an entity.

Are There Exemptions?

Yes, certain property transfers do not require reporting under the FinCEN residential real estate rule. You must understand these exemptions because they determine whether a BOI filing triggers.

Exempt transactions include:

• Transfers due to death, divorce, or bankruptcy
  If property changes hands because of an estate settlement, divorce decree, or bankruptcy proceeding, no report is required. Courts and other legal authorities already oversee these.
  
• Court-supervised property transfers
  Any transfer ordered and managed by a U.S. court, such as a foreclosure sale, does not fall under the rule.
  
• 1031 Exchanges
  Transfers to a qualified intermediary (QI) as part of a tax-deferred 1031 Exchange are exempt. The transaction already falls under federal tax rules, so it avoids the reporting burden.
  
• No-consideration transfers into a grantor trust
  This is one of the most relevant exemptions for investors. For example:
  
  • If you already own property and later transfer it into your living trust, the transaction may be exempt because you, and possibly your spouse, are the trust’s settlors.
    
  • The same can apply to land trust transfers if you are the grantor and no money changes hands. This exemption is important for estate planning since many investors use trusts to simplify inheritance and avoid probate.
    
• DIY deeds with no reporting person
  If you draft and record a deed on your own, the rule may not apply because no reporting person is involved. However, this path carries serious risks. If you do not use a professional, you may lose access to title insurance or make filing errors that could threaten your ownership record.

Why these exemptions matter:

• They preserve flexibility for personal planning (such as moving property into a living trust).
  
• They protect tax strategies (like 1031 Exchanges).
  
• They prevent duplicative reporting where oversight already exists (such as court-ordered transfers).

However, note that LLC transfers are not generally exempt. When you move property into an LLC or buy property through one, the transaction is usually reportable, even if you are the only member. The only exception is if another exemption applies.

How Does This Impact Living Trusts, Land Trusts, and LLCs?

• Living Trust Real Estate: Buying with cash in your trust? Reportable. Transferring an already-owned property into your living trust? Often exempt.
  
• Land Trust Transfer: Cash purchases = reportable. No-consideration transfers by the settlor = often exempt.
  
• LLCs and Corporations: Cash purchases into LLCs = reportable. Transfers of owned property into LLCs? Reportable if handled by a title/escrow pro.

So yes, keep using entities and trusts. They still protect you legally, provide tax benefits, and help with avoiding probate. Just plan for reporting.

What Are The Penalties?

Failing to file a required report triggers significant penalties.

• Civil Penalties: Fines start at $1,300 per day for each violation.
  
• Escalated Civil Penalties: If there is a pattern of negligence, fines can exceed $100,000.
  
• Criminal Penalties: Willful violations may result in criminal charges, which can include additional fines and potential imprisonment.

Property owners face a practical risk. If you cannot quickly provide the required Beneficial Ownership Information (BOI), your closing may stall or fail. Title companies, escrow agents, and attorneys face financial and professional risk because they are directly responsible for following the rule.

Does This End Privacy In Real Estate?

No. These reports are not public record. Law enforcement and the Treasury will see them, but your neighbor won’t. 

Your Secretary of State filings, bank accounts, and real estate holdings already connect your entities to your tax return. This rule just adds another layer of reporting.

How Should Investors Prepare?

Here’s my checklist for property owners and investors:

1. The rule goes live on December 1, 2025. Be prepared to make changes.
   
2. Identify cash real estate purchases and entity transfers in your pipeline.
   
3. Prepare your BOI packet. Should include: IDs, SSNs, and addresses for all beneficial owners.
   
4. Confirm exemptions if moving assets into a trust.
   
5. Coordinate with your closing team.
   
6. Don’t avoid planning just to dodge reporting. Keep your trusts and LLCs for protection.

If you’re not sure how this rule applies to your situation, always schedule time to talk with your attorney. And if you don’t have one, I invite you to schedule a free 45-minute Strategy Session with Anderson Advisors. We will review your LLCs, trusts, and property transfers. Our goal is to keep you protected, compliant, and positioned to claim every tax benefit.

Final Word From Toby

It’s true that many investors see new reporting rules as just another hurdle. But the purpose of the FinCEN residential real estate rule is to target bad actors, not ordinary property owners. When you understand how it works, you can continue buying, transferring, and protecting your assets with confidence.