The Corporate Transparency Act: What Real Estate Investors Need to Know

As we creep closer to the end of the year, real estate investors who operate under legal entities face a crucial deadline. The Corporate Transparency Act (CTA) is set to shake up how we report business ownership. While not directly related to 1031 exchanges, this new law impacts many of our clients’ legal affairs. Here’s what you need to know about the Corporate Transparency Act:

Who’s Affected by the Corporate Transparency Act?

If you’ve created an LLC or corporation for your real estate investments, pay attention. The CTA applies to most companies formed or registered in the U.S., including:

• Single-member LLCs
• Family-owned companies
•  Entities created for estate planning

What’s Required by the CTA?

You’ll need to report under the corporate transparency act:

• Company details (name, address)
• Information about beneficial owners (those owning 25%+ of the company)
• Details about who formed or registered the entity

Key Deadlines

• Existing entities: File by January 1, 2025
• New entities: File within 30 days of formation as per the CTA requirements.

Why It Matters

Non-compliance with the corporate transparency act can be costly:

• Civil penalties up to $500 per day
• Criminal penalties including fines up to $10,000 and possible imprisonment

Some Good News

Certain entities are exempt, including publicly traded companies and some larger businesses. However, most small to medium-sized real estate investment entities will likely need to file under the CTA.

Bottom Line

While this new requirement might seem like a hassle, it’s part of a broader effort to create a more transparent financial system. As real estate investors, we’re no strangers to paperwork – consider this one more step in protecting your investments within the framework of the Corporate Transparency Act.

Not sure if you need to file? Don’t worry. At WealthBuilder 1031, we’re here to guide you through these new requirements alongside your 1031 exchange needs. Give us a call at 888-508-1901, and let’s ensure your real estate investments stay compliant and profitable.