The Financial Crimes Enforcement Network (FinCEN) is proposing a new requirement for certain financial entities, like title companies, to report cash purchases of residential real estate. The aim is to combat potential money laundering, particularly in large cities such as New York or Miami, where purchases via LLCs or trusts are common. Farm CPA Report with Paul Neiffer notes that under the proposal, any cash purchase of residential real estate by a trust, LLC or similar entity would need to be reported. This includes land intended for future home construction, potentially impacting farmland purchases. However, financed purchases through regulated financial institutions would be exempt, except in cases where the seller provides financing.
Certain low-risk transfers, such as those due to death, divorce or bankruptcy would be exempt from reporting. However, there is no exemption based on property value.
For transactions involving no reporting person, such as a title company, the individual preparing the deed, often an attorney or title company, would be responsible for reporting.
For farmers, most transactions financed by banks would be exempt. However, cash purchases or those involving seller financing could trigger reporting requirements, adding an additional bureaucratic layer. “All-in-all, just another layer of bureaucracy that farmers will have to deal with if this requirement is put into place. It is currently just a proposal but will likely happen sometime in the future. While the proposal is not yet finalized, it is expected to be implemented in the future,” Neiffer concludes.
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