Buying or transferring residential property through an entity or trust? A new reporting rule applies

For many property owners and investors in the US, transferring residential real estate into a trust or legal entity is a strategy used for privacy, asset protection, estate planning, or investment purposes. But these transactions may trigger a new federal reporting obligation that deserves close attention.

The new Residential Real Estate Reporting (RRER) rule expands transparency requirements in residential real estate transactions and has real consequences for individuals, families, investors, and advisors who regularly use trusts or entities to hold property.

About the Residential Real Estate Reporting (RRER) Rule

The RRER rule, which took effect on March 1, 2026, requires parties who transfer residential real estate to trusts or legal entities to disclose certain information regarding beneficial ownership and signing individuals to the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). 

At a high level, the RRER rule applies to transfers of residential real estate to trusts or legal entities, including:

• Corporations
• Limited liability companies (LLCs)
• Limited partnerships (LPs) and general partnerships (GPs)
• Trusts, both domestic and foreign

If a residential property is transferred to any of the above, certain information must be reported to FinCEN. Importantly, this rule captures many common planning and investment structures, particularly those used for privacy or asset‑holding purposes.

Beneficial ownership and information that must be disclosed

The RRER rule focuses on “beneficial ownership” and the individuals behind the structure.  

For legal entities, beneficial owners include:

• Individuals or entities that exercise substantial control over the entity
• Individuals or entities that own or control at least 25% of the entity’s ownership interests

For trusts, beneficial ownership is broader and can include:

• Trustees
• Trust protectors
• Grantors or settlors
• Individuals who are the sole permissible recipients of trust income or principal
• Beneficial owners of any legal entities if such legal entities are beneficial owners of the trust

For each beneficial owner, identifying information generally includes legal name, address, tax identification number, citizenship, and date of birth. Details about the transfer of residential properties such as the closing date, consideration paid and property description must also be reported.

Do any exceptions apply?

There are exceptions, and certain transfers do not fall within the scope of the RRER rule. For instance, transfers of commercial property - except certain mixed-use properties containing commercial and residential uses - and transfers of residential properties containing more than four dwelling units do not require reporting. 

In addition, transfers financed by regulated banks and lending institutions are not reported because such institutions are subject to anti-money laundering and suspicious activity reporting regulations. Finally, the RRER rule provides a list of other exceptions from reporting, which include, most notably, transfers for no consideration to a revocable living trust, testamentary transfers, and transfers incident to divorce, among others.

Because these exceptions are highly fact‑specific, determining whether a transaction is exempt requires careful analysis.

When is the deadline to report?

For qualifying transfers on or after March 1, 2026, the reporting deadline is the later of:

1. The last day of the month, after the month in which the date of closing occurred
2. 30 days after the date of closing

What are the penalties for non-compliance?

Negligent failure to report could result in a civil penalty of $1,430 per violation and an additional civil money penalty of up to $111,308 for a pattern of negligent activity.  Willful failure to report could result in a civil penalty of the greater of the amount involved in the transaction (not to exceed $286,184) or $71,545.  Criminal penalties may also apply to willful violations of the rule.

These penalties underscore why early analysis and planning are essential.

How Withers can help with RRER compliance

The RRER rule reflects a shift in how residential real estate transfers involving trusts and entities are monitored and a growing US federal emphasis on transparency in real estate ownership, particularly where property is held through structures.  For buyers and families, it may mean privacy expectations or approaches need to be reassessed.  For investors, it introduces a new compliance layer that must be factored into transaction timelines. For advisors, it raises the stakes for getting pre‑closing guidance right.  

If you are transferring property into a trust or legal entity, or advising someone who is, determining whether a transfer falls within the scope of the RRER, whether an exception applies, and what information must be included for a required disclosure can be complex.  If you are concerned about reporting for an upcoming transfer, please contact us as soon as possible to discuss compliance with the RRER rule.   

This article was authored by Yin T. Ho.