What Is the FinCEN Residential Real Estate Rule? Who Does This Rule Affect in Arizona? What Transfers Are Reportable vs. Exempt? Transferring Property to a Living Trust in Arizona Transferring Property to an LLC in Arizona Transfers by Will, Trust, Intestate Succession & Small Estate Affidavit What Information Must Be Reported? Deadlines and Penalties What About 1031 Exchanges? Is This Rule Still in Effect? Legislative & Legal Challenges How This Rule Intersects With Arizona Property Law Key Takeaways for Arizona Property Owners
What Is the FinCEN Residential Real Estate Rule?
On August 29, 2024, FinCEN published the final rule titled Anti-Money Laundering Regulations for Residential Real Estate Transfers , codified at 31 C.F.R. § 1031.320 . [1]
The rule was originally set to take effect December 1, 2025, but FinCEN issued exemptive relief in September 2025, delaying the effective date toMarch 1, 2026 .[2]
The rule requires certain real estate professionals — including attorneys, settlement agents, title companies, and escrow agents — to file a Real Estate Report (FinCEN Form RE100) with FinCEN for qualifying transfers of residential property. Its purpose is to increase transparency and combat money laundering through U.S. residential real estate.[3]
Why Was This Rule Created?
FinCEN has found that illicit actors frequently use non-financed real estate transactions — particularly those where the buyer is an LLC or trust — to launder money and conceal the true identity of property owners. Traditional bank mortgage transactions are already subject to anti-money laundering (AML) programs; all-cash and entity transactions had no comparable oversight.[4]
This rule builds on FinCEN’s longstanding Geographic Targeting Orders (GTOs), which required similar reporting in specific high-risk markets for years. The new rule is nationwide and permanent, applying in every state — including Arizona.
Who Does This Rule Affect in Arizona?
The rule does not affect the vast majority of typical home purchases. If you are an individual buying a home in your own name with a conventional bank mortgage, this rule does not apply to you.
The rule is triggered when three conditions are met:
The property is residential real property (one-to-four family homes, condos, co-ops, townhomes, or vacant land intended for residential development);
The transfer is non-financed — meaning it does not involve a conventional mortgage from a qualifying financial institution; and
The transferee (the new owner) is a legal entity or trust — not an individual natural person.
In Arizona, this commonly affects:
Estate planning clients transferring their home into a revocable living trustReal estate investors moving rental or investment properties into an Arizona LLCFamilies receiving property through an inheritance, will, or trust distributionDevelopers and landlords restructuring ownership of residential propertiesAnyone conducting an all-cash purchase of a home through an entity
“The rule does not place any obligation on property owners directly — the filing obligation falls on the attorney, title company, or other professional handling the transaction. But it does require them to collect detailed information from you.”
What Transfers Are Reportable vs. Exempt?
Not every transfer to an entity or trust is reportable. The rule contains a meaningful set of exemptions. The following table summarizes the most common scenarios Arizona property owners encounter:
Transfer Type
FinCEN Report Required?
Transfer to your own revocable living trust (you are the grantor/settlor)
Exempt
Transfer to an LLC you own, for $0 or any consideration
Reportable
Transfer by will to a beneficiary upon death
Exempt
Distribution from a deceased person’s trust to a beneficiary
Exempt
Transfer by intestate succession (no will)
Exempt
Transfer via Arizona small estate affidavit
Exempt
Transfer incident to divorce
Exempt
All-cash purchase by an LLC or entity from a third-party seller
Reportable
Transfer to a trust where the transferor is NOT the grantor/settlor
Reportable
Transfer to a qualified intermediary as part of a 1031 exchange
Exempt
Transfer to a court-supervised bankruptcy estate
Exempt
Transfer to a public company, bank, credit union, or other regulated entity
Exempt
Inherited property immediately transferred to a new LLC by the beneficiary
Reportable
⚠ Important: No Threshold Exemption
There is no minimum dollar amount below which reporting is excused. FinCEN has confirmed that low-price and even zero-dollar transfers to entities and trusts can present the same money-laundering risks as high-dollar transactions.[5]
Transferring Property to a Living Trust in Arizona
Transferring a home into a revocable living trust is one of the most common estate planning moves in Arizona. It avoids the time and expense of probate, keeps the transfer of your home private at death, and allows you to designate exactly who inherits the property and on what terms.
The good news is that this type of transfer is generally exempt from FinCEN reporting. [6]
✓ Example: Exempt Trust Transfer
Patricia owns her Scottsdale home in her individual name. As part of her estate plan, she deeds it into the Patricia L. Smith Revocable Living Trust , of which she is the grantor and sole trustee. Because Patricia is both the transferor and the grantor of the trust, this transfer falls within the exemption. No FinCEN Real Estate Report is required.
When a Trust Transfer IS Reportable
The exemption is specific — it does not cover every trust transfer. You should be aware that a transfer to a trust is reportable if:
The person transferring the property did not create the trust (i.e., is not the grantor or settlor);
The property is being transferred for actual monetary consideration to a trust owned by a different person;
The trust is an irrevocable trust not created by the transferring party.
If there is any question about whether your trust transfer qualifies for the exemption, you should consult with your attorney before the deed is recorded.
What About Joint Revocable Trusts?
Many Arizona married couples create a joint revocable trust together. Transfers to a joint revocable trust where the transferring spouse or spouses are both grantors of the trust should also qualify for the exemption, as the rule allows for transfers where the individual and their spouse are jointly the grantor/settlor. Your attorney should confirm this analysis applies to your specific trust document.
Transferring Property to an LLC in Arizona
Arizona real estate investors frequently hold rental properties and investment homes in their personal names and later decide to transfer them into an Arizona limited liability company for liability protection, tax planning, or to facilitate co-ownership. Beginning March 1, 2026, these transfers are reportable — with no exceptions based on ownership, relationship, or lack of purchase price.
This is perhaps the most important — and most surprising — aspect of the rule for investors. Even if you are the 100% owner of the LLC, even if you have owned the property for decades, and even if no money changes hands, the transfer still triggers a federal reporting obligation.[5]
✗ Example: Reportable LLC Transfer
Robert owns a rental home in Tempe in his own name. He forms an Arizona LLC — Robert Martinez Real Estate LLC — and deeds the property into it for $0, simply to limit personal liability. Despite the zero-dollar consideration and the fact that Robert owns 100% of the LLC, a FinCEN Real Estate Report must be filed for this transfer.
What Happens in Practice
When you bring an LLC transfer to your attorney, the attorney (or title company, if one is involved) will need to collect detailed information before the deed can be finalized and recorded. This information must be reported to FinCEN within 30 days of the transfer. See the section below on what specifically must be reported.
Existing Properties vs. New Acquisitions
The rule applies to all reportable transfers occurring on or after March 1, 2026 — it does not matter whether the property was acquired before or after that date. If you are transferring a property you have owned for years into a newly formed LLC, the transfer is reportable from March 1, 2026 forward.
What If My LLC Already Has a FinCEN Identifier?
If your LLC has previously obtained a FinCEN Identifier through the Corporate Transparency Act (CTA) beneficial ownership reporting process, that identifier can be used in place of providing the full beneficial ownership details on the Real Estate Report. This can meaningfully streamline the process. Ask your attorney whether your LLC has a FinCEN Identifier on file.
Transfers by Will, Trust, Intestate Succession & Small Estate Affidavit
When property passes at death — regardless of the mechanism used — the transfer is fully exempt from FinCEN reporting. This exemption covers all the standard ways residential real estate is transferred in Arizona upon an owner’s death.[7]
Testate Transfers (Death With a Will)
When an Arizona decedent’s will directs that a home pass to a named beneficiary, the deed transfer implementing that bequest is exempt. This applies whether the transfer occurs through formal probate in Arizona Superior Court or through a simplified procedure.
Trust Distributions at Death
Arizona residents frequently hold real property in revocable living trusts precisely to avoid probate. When the grantor dies and the successor trustee transfers the property to a named trust beneficiary, that distribution is exempt — even if the beneficiary is an entity or a different trust.
Intestate Succession
If an Arizona resident dies without a will, real property passes to heirs under Arizona’s intestacy statutes (A.R.S. § 14-2101 et seq.). Transfers implementing intestate succession are exempt from FinCEN reporting.
Arizona Small Estate Affidavit (A.R.S. § 14-3971)
Arizona allows heirs to use a small estate affidavit to claim personal property when the gross estate does not exceed $75,000 (as periodically adjusted). For real property, a separate affidavit procedure applies under A.R.S. § 14-3971(E). Both types of affidavit-based transfers occurring as a result of death are exempt from FinCEN reporting.
⚠ Watch Out: Subsequent Transfers Are a Separate Analysis
The death-transfer exemption covers only the initial transfer from the estate or trust to the heir or beneficiary. If that beneficiary then transfers the inherited property into an LLC or a third-party trust, that subsequent transfer is a brand new transaction and must be analyzed separately. If it meets the reportable-transfer criteria, a FinCEN report will be required for it.
What Information Must Be Reported?
When a transfer is reportable, the reporting person (typically the attorney, title agent, or settlement agent) must collect and report the following information to FinCEN via the BSA E-Filing System.[8]
About the Property
Property address and legal description
Type of residential property
About the Transferee Entity or Trust
Full legal name, address, and EIN (or FinCEN Identifier, if available)
Type of entity (LLC, corporation, trust, etc.)
About Each Beneficial Owner (Entities)
For every individual who owns 25% or more of the entity, or who exercises substantial control:
Full legal name
Current address
Date of birth
Social Security Number or Individual Taxpayer Identification Number
A copy of a government-issued photo ID (driver’s license or passport) — retained in the reporting person’s file;not submitted to FinCEN
About the Transaction
Total consideration paid (including $0 if no money changes hands)
Payment method and account information
Date of closing
About the Transferor (Seller/Grantor)
Name and identifying information of the person transferring the property
Record Retention
The reporting attorney or professional must retain the signed beneficial ownership certification and any written designation agreements forfive years from the date of filing. Clients should also keep copies of their own certifications for their records.
Deadlines and Penalties
The Real Estate Report must be filed by the later of : (i) the final day of the calendar month following the month in which the closing occurred, or (ii) 30 calendar days after the date of closing.[9]
Example Deadline Calculation
A deed is executed and recorded in Maricopa County on March 15, 2026. The report deadline is the later of April 30, 2026 (last day of the following month) or April 14, 2026 (30 days after March 15). The controlling deadline is April 30, 2026 .
The rule does not include its own penalty schedule. Instead, violations are subject to the general civil and criminal penalty framework under the Bank Secrecy Act, 31 U.S.C. §§ 5321 and 5322.[10]
Potential Penalties for Non-Compliance
$1,394 Per negligent violation (as inflation-adjusted)
$108,489 Pattern of negligent activity
$69,733 Per willful violation
$278,937 Maximum per willful violation
5 Years Maximum criminal imprisonment
$250,000 Maximum criminal fine
Note that these penalties fall on the reporting person — the professional responsible for filing — not directly on the property owner. However, providing false or incomplete information to the reporting person can itself create legal exposure. Accurate and timely cooperation with your attorney’s information-gathering process is important.
What About 1031 Exchanges?
Real estate investors in Arizona frequently use like-kind exchanges under Internal Revenue Code § 1031 to defer capital gains taxes when selling investment property and replacing it with another. The FinCEN rule includes an exemption for transfers to a qualified intermediary (QI) for the purposes of a 1031 exchange.[11]
However, this exemption only covers the initial transfer to the QI — not every step in the exchange. When the QI later transfers the replacement property to the exchanger, that transfer is potentially reportable if the exchanger is a legal entity or trust. Arizona investors using 1031 exchanges through an LLC should raise this with their attorney and qualified intermediary at the outset of the exchange.
Is This Rule Still in Effect? Legislative & Legal Challenges
As of the date of this article, the FinCEN Residential Real Estate Rule is in effect and compliance is required. However, there have been notable efforts to block or repeal it:
On February 5, 2025, Senator Mike Lee introduced a Senate Joint Resolution (S.J.Res.) under the Congressional Review Act expressing disapproval of the rule.[12]
On February 12, 2025, Representative Andrew Clyde introduced a companion House Joint Resolution (H.J.Res. 55) seeking the same result.[12]
A lawsuit —Flowers Title Companies LLC v. Bessent — was filed in the U.S. District Court for the Eastern District of Texas challenging the rule.[12]
As of publication, neither congressional resolution has passed, and the litigation has not resulted in an injunction.
Arizona property owners and professionals should assume the rule is in effect and comply accordingly. If the rule is later suspended, narrowed, or repealed, we will update this article promptly.
How This Rule Intersects With Arizona Property Law
Arizona has its own distinctive real estate law landscape that intersects with this federal rule in several ways worth noting for Arizona practitioners and property owners.
Arizona LLC Formations
Arizona limited liability companies are governed by the Arizona Limited Liability Company Act (A.R.S. Title 29, Chapter 7, as substantially revised). Arizona’s relatively straightforward LLC formation process has made LLCs a popular vehicle for holding investment real property. Every Arizona LLC receiving a residential property transfer on or after March 1, 2026 will trigger a FinCEN reporting obligation regardless of how the LLC was formed or how long it has existed.
Arizona Living Trusts and the Probate Avoidance Context
Arizona is a community property state, and many residents hold real property in revocable living trusts to avoid Arizona’s probate process and take advantage of community property protections. As discussed above, the typical transfer to one’s own revocable living trust is exempt — but the analysis should be confirmed for each specific transfer, particularly in blended-family or complex trust situations.
Arizona Small Estate Procedures
Arizona offers one of the more accessible small estate procedures in the country. Under A.R.S. § 14-3971, heirs can use an affidavit to transfer real property with a value not exceeding $100,000 (as adjusted) without formal probate. These affidavit-based transfers resulting from death are exempt from FinCEN reporting — a helpful outcome for families dealing with Arizona estates that fall within the small estate threshold.
Maricopa County and Pima County Recorder Requirements
The FinCEN rule is separate from and in addition to Arizona’s existing deed recording requirements with the Maricopa County Recorder, Pima County Recorder, and other Arizona county recorders. Deeds must still meet all Arizona statutory requirements for recording, including the affidavit of legal value (Arizona Transaction Privilege Tax requirements), regardless of whether a FinCEN report is also required.
Key Takeaways for Arizona Property Owners
Here is a plain-language summary of what to remember:
If you are transferring your home to your own revocable living trust, If you are an investor transferring any property to an LLC, If you are receiving property through an estate, inheritance, trust distribution, or small estate affidavit, If you inherit property and then want to move it into an LLC, Contact your attorney before the transaction, not after. The rule is in effect now.
Have an Upcoming Property Transfer in Arizona?
Our team is ready to help you navigate the new FinCEN reporting requirements and ensure your transaction is handled correctly and on time.
Schedule a Consultation
Or call us at480-805-4357
Legal Disclaimer:
AVID Esq. Group LLC represents clients throughout Arizona including Maricopa County, Pima County, Pinal County, and surrounding areas.
