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Selling Property in Iran and Bringing Money to the U.S.: OFAC General and Specific License Rules
How and when the property came into your hands largely decides whether the general license at 31 C.F.R. § 560.543 reaches your sale, or whether you need a specific license. A scenario-by-scenario guide.
Please Read Before Acting OFAC regulations change from time to time, and the Iran program has changed repeatedly in recent months. Please consult an OFAC attorney before making any decision or taking any action in this regard. For any tax consequences, please also consult your trusted accountant — an OFAC authorization settles nothing about U.S. tax, reporting, or foreign-account obligations. This post is general information only. It is based on the regulations in effect as of the date of this update and does not constitute legal advice or create an attorney-client relationship. |
The question that actually matters
Iranian-American families usually come to us asking whether they are allowed to own property in Iran. The more useful question is what they are allowed to do with it — because the sale, the hiring of a broker, the signing of the deed, and the transfer of the proceeds are each transactions that U.S. sanctions law reaches.
The Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the “ITSR”), govern that question, and one provision does most of the work for sales. Whether it reaches a given client turns largely on how, and when, the property came into their hands. Two families can own identical apartments on the same street and get opposite answers, because of the manner and the timing of how each acquired it.
This article walks through the acquisition scenarios we see most often and what each one means for selling the property and repatriating the money. Before that, one correction to a common assumption about the years before a sale.
A word on what this article can and cannot do. It sets out the rules we have verified and identifies, explicitly, the points where the authorities do not resolve the question and an individual determination is required. No article can guarantee the correct answer for every transaction, and any writer who tells you otherwise is selling certainty that the regulations do not supply. Where we are reasoning rather than quoting, we say so in the text.
First, a word about simply holding the property
It is often said — we have said versions of it ourselves — that owning property in Iran creates no problem until you try to sell. That is too comfortable, and it is not accurate.
The ITSR prohibit transactions, not status. Holding bare legal title, with nothing else happening, is not an enumerated prohibited transaction. But almost nobody holds property that passively. Section 560.206(a) provides that, except as otherwise authorized, “no United States person, wherever located, may engage in any transaction or dealing in or related to … Goods or services of Iranian origin or owned or controlled by the Government of Iran.” Section 560.206(b) then defines the operative term broadly: “the term transaction or dealing includes but is not limited to purchasing, selling, transporting, swapping, brokering, approving, financing, facilitating, or guaranteeing.” And § 560.306(c)(1) defines services of Iranian origin to include “[s]ervices performed in Iran or by an entity organized under the laws of Iran or any jurisdiction within Iran, or a person residing in Iran.”
Engaging a caretaker or property manager in Iran, paying for repairs, retaining a local agent, leasing the property and collecting rent, or paying municipal charges each require analysis against that language, and in our view most such arrangements fall within it. Capital improvements raise a further question under § 560.207, which provides that “any new investment by a United States person in Iran or in property (including entities) owned or controlled by the Government of Iran is prohibited,” with § 560.316 defining new investment to include “[a] commitment or contribution of funds or other assets.”
We are not aware of any general license in subpart E that authorizes a U.S. person who does not reside in Iran to manage, maintain, lease, or collect rent on Iranian property outside the context of a sale. Section 560.543 authorizes transactions “necessary and ordinarily incident to the sale,” which reaches the sale process itself, not the years preceding it. Section 560.552 reaches routine living expenses of U.S. citizens who permanently reside in Iran, which is a different situation. We state that as the result of our review rather than as a certainty; a client whose property has been generating income, or absorbing expenses, for years should have that history examined rather than assumed away.
None of this means every expense during the holding period was prohibited, and the article should not be read that way. Some activity sits outside the prohibitions altogether — § 560.210(d) exempts transactions ordinarily incident to travel, including maintenance and living expenses while in Iran, and § 560.552 reaches routine maintenance and personal living expenses of U.S. citizens who permanently reside there. Neither is authority to run a rental business or to improve an investment property from abroad. The point is that the holding period is part of the analysis, not a neutral background fact, and it should be examined rather than assumed in either direction.
The one provision that governs: 31 C.F.R. § 560.543
Section 560.543 authorizes individuals who are U.S. persons “to engage in transactions necessary and ordinarily incident to the sale of real and personal property in Iran and to transfer the proceeds to the United States, provided that such real and personal property was acquired before the individual became a U.S. person or inherited from persons in Iran.” It expressly permits engaging people inside Iran to accomplish the sale — “an attorney, funds agent, or broker.”
Read the proviso closely. It contains two independent paths, joined by “or”:
• The acquisition path — the property was acquired before the individual became a U.S. person. Time-gated. The text does not qualify the manner of acquisition, only its timing.
• The inheritance path — the property was inherited from persons in Iran. Not time-gated. An inheritance that opens years after naturalization still sits inside the license.
If a client lands on either path, the sale and the repatriation are generally licensed and no application to OFAC is required — provided the transaction also stays within subsection (b)’s exclusions, clears every party against the blocking rules, and is paid through a channel the regulations permit. Each of those is addressed below, and any one of them can defeat an otherwise qualifying sale. “Clears every party” is doing careful work there rather than meaning no blocked person may be involved at all — § 560.543 carries a narrow exception for persons blocked solely as the Government of Iran under E.O. 13599, set out in Scenario 2.
Section 560.543 also does not override the rest of the sanctions landscape. OFAC said so when it issued the 2018 amendment: the section “does not authorize transactions that would be prohibited by a different sanctions program administered by OFAC, such as transactions with SDNs designated under E.O. 13224 or E.O. 13382.” A qualifying sale to a counterterrorism-designated buyer is not a qualifying sale.
General licence, specific licence, and the step most people skip
A general license is self-executing. Most sit in the regulations themselves, but OFAC also issues general licenses separately on its website — General Licenses BB, DD and L, all discussed here, are web-published rather than codified, so the CFR alone is not a complete list. As OFAC puts it, general licenses “allow persons to engage in certain transactions without needing to apply for a specific license, provided the transactions meet certain terms and conditions.” A specific license is issued case by case in response to an application, and the transaction stays prohibited while that application is pending.
Here is the step that gets skipped, and we have been guilty of it ourselves in earlier writing. “Not covered by § 560.543” does not mean “apply for a specific license.” It means the general license does not resolve the question, and the analysis moves to two further ones: is the proposed activity actually prohibited by the ITSR at all, and if it is, does any exemption or other authorization reach it? A specific license is required only where the activity is prohibited and nothing else authorizes it. Collapsing those steps sends clients into a licensing process they may not need — or, worse, reassures them that an application is the answer when the real problem is a prohibition no license is likely to lift.
Two practical points about the application route, both from guidance OFAC refreshed in September 2026. On timing, FAQ 58 says OFAC reviews applications “on a case-by-case basis, generally in the order in which they are received,” that the process varies and may require further information or consultation with other agencies, and that “an increase in the volume of licensing applications may lead to longer wait times.” It offers no target date, and following OFAC’s Best Practices for License Applicants is what it suggests to speed matters along. On a refusal, FAQ 76 describes a reconsideration route: applicants or other interested parties may request reconsideration “at any time” on the basis of changed circumstances or new facts not previously made available to OFAC, submitted as a new application referencing the earlier denial. Under a presumption of denial, that is worth explaining to a client before they file rather than after.
The section was broadened on November 5, 2018 (83 FR 55271). That rule revised the section heading, paragraph (a), and paragraph (b)(2) to extend the authorization from real property alone to real and personal property, so the license is no longer confined to land and buildings.
Two definitions that decide close cases
“U.S. person” is wider than citizenship. Section 560.314 defines it as “any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.” That final clause matters enormously here: physical presence in the United States can itself confer U.S. person status. A client who was studying in the United States on an F-1 when a relative transferred property to them may have been a U.S. person at that moment, years before any green card. Establishing the date status attached is an immigration-history exercise, not a glance at a certificate.
“Persons in Iran” is not defined. The inheritance path requires that the property be inherited from persons in Iran, and subpart C of the ITSR contains no definition of that phrase. The regulations define “Government of Iran” (§ 560.304) and “Iranian financial institution” (§ 560.324), and they use “ordinarily resident in Iran” elsewhere, but “persons in Iran” as used in § 560.543 stands undefined. In the ordinary case — a parent who lived and died in Iran — this causes no difficulty. In the unusual case, discussed below, it is a genuine gap.
Scenario by scenario
What follows are the acquisition patterns we encounter in practice. For each, the question is the same: can this client sell the property in Iran and bring the proceeds to the United States under § 560.543?
Scenario 1 — You bought it before you immigrated
A client purchased an apartment in Tehran in 2009, emigrated in 2014, and naturalized in 2021. Assume — and each of these has to be checked, not presumed — that in 2009 she was neither a citizen nor a permanent resident, was not physically present in the United States, and had no earlier period of U.S. person status. The apartment has stood empty since the family left.
On those facts the sale is covered, on the acquisition path. The property was acquired before the client became a U.S. person, which is all the first path requires. The sale and the repatriation of proceeds are generally licensed, and the client may engage an Iranian attorney or broker to handle the transaction.
Note what did the work there, because it is not what clients expect. The date she left Iran is not the test, and neither is the date she naturalized. The test is when U.S. person status attached, and under § 560.314 that status can arise from physical presence in the United States alone, independently of any immigration status.
That raises a question the regulation does not answer, and we flag it rather than resolve it. Status under the “any person in the United States” prong is not permanent — it attaches while the person is here and lapses when they leave. So if a client spent a summer in the United States in 2008 and bought the Tehran apartment in 2009, was the property “acquired before the individual became a U.S. person”? On one reading, she first became a U.S. person in 2008 and the 2009 purchase came after. On another, what matters is whether she was a U.S. person at the moment of acquisition, and in 2009 she was not. The text supports neither reading conclusively, and we are not aware of OFAC guidance addressing it. A client with earlier periods of presence in the United States should have that history examined rather than assume it is either fatal or irrelevant.
Change one fact and a second issue appears. Had the apartment been rented out over those years — to a cousin, or to anyone — the leasing, the management, and the collection of rent would need their own analysis under § 560.206, as discussed above. A clean answer on the sale does not retroactively clean up the holding period, and clients should expect to be asked what the property has been doing since they left.
Documents to establish: the title deed (sanad) showing the purchase date, and evidence fixing when U.S. person status attached — including, where relevant, dates of physical presence in the United States that predate the green card.
Scenario 2 — You inherited it from a parent in Iran
A client’s father died in Isfahan in 2024. The client, already a U.S. citizen since 2016, inherited a one-third share of the family home alongside two siblings.
Covered, on the inheritance path. The property was inherited from a person in Iran, which is what the second path requires, and that path contains no timing condition. That the client already held U.S. status when the inheritance opened does not take the sale outside the license.
But a qualifying share is not a qualifying transaction. The license runs to this client and this client’s interest. It does not by itself authorize everything that a joint sale involves: acting as agent for co-owners who are not U.S. persons, handling or distributing their portions of the proceeds, or any arrangement in which the client’s authorized interest is used to move value that is not theirs. Section 560.543 expressly contemplates engaging persons in Iran to accomplish a sale, and in our view a partition or joint sale among heirs can sit within transactions “necessary and ordinarily incident to the sale” — but that is our reading, not a rule OFAC has stated, and it does not extend to the other owners’ money. The authority to act, the allocation of proceeds, and the payment route each need their own answer.
One carve-out worth knowing, because it saves clients a pointless licence application. The authorization to engage persons in Iran is conditioned on that person not being blocked — but not absolutely. As OFAC put it when it issued the 2018 amendment, authorized transactions include engaging the services of persons in Iran necessary for the sale, “provided such person is not a person whose property and interests in property are blocked pursuant to any part of 31 CFR chapter V, other than persons whose property and interests in property are blocked solely pursuant to Executive Order 13599 as the Government of Iran.” A person blocked only in their capacity as the Government of Iran under E.O. 13599 is therefore not automatically disqualified from providing necessary sale services. The carve-out can matter in a property sale, because Iranian conveyancing routinely runs through state organs and state-owned institutions, and § 560.304 defines the Government of Iran to reach political subdivisions, agencies and instrumentalities. Whether a particular party is blocked solely in that capacity, or under some other authority, is a question to answer rather than assume — and anyone blocked under another authority, a counterterrorism or counterproliferation designation for instance, is a different matter entirely. See OFAC FAQ 640.
Documents to establish: the death certificate, the certificate of succession (gavahi-ye enhesar-e verasseh), and the deed showing the decedent’s ownership.
Scenario 3 — Your parents gave it to you before you became a U.S. person
A client’s mother transferred a shop to her by hebeh (gift) in 2011. The client first entered the United States in 2016 and became a permanent resident in 2019.
Covered, on the acquisition path. A lifetime gift is not an inheritance — that is our reading of the word in § 560.543, which OFAC has not defined — so the second path does not reach it. But the first path does not qualify the manner of acquisition. It requires only that acquisition preceded U.S. person status, which it did.
This is the point most commonly misunderstood: an inter vivos gift is not categorically outside § 560.543. Acquisition timing determines whether this route is available, subject to the section’s other conditions.
Scenario 4 — Your parents gave it to you after you became a U.S. person
The same gift, executed in 2023, two years after the client naturalized. Families often do this deliberately — transferring to children during the parents’ lifetime to avoid Iranian succession complications while continuing to live in the property.
Not covered. The acquisition postdates U.S. person status, so the first path fails, and on the reading above a lifetime gift is not an inheritance, so the second fails too. Absent some other authorization, selling this property and repatriating the proceeds requires a specific license from OFAC.
This is the scenario that causes the most damage, because it is created by well-intentioned planning. The practical result is that the client may hold an asset with no authorized route to convert it into money in the United States.
We will not tell you the gift itself was lawful, because that is a separate question we cannot answer in the abstract. Accepting a transfer of Iranian property is not a single act; it involves executing a deed, usually engaging a notary or registry in Iran, and frequently paying transfer charges. Services performed in Iran are services of Iranian origin under § 560.306(c)(1), and dealings in them are restricted by § 560.206(a) unless authorized or exempt. Whether any particular step in a particular transfer was prohibited depends on what was actually done and by whom. A client who has already accepted such a gift needs that history examined, not reassurance.
Families still weighing how to structure a transfer should understand that the sequence — transfer first, or immigration status first — is the decision, and that it is far easier to analyze in advance than to unpick afterward.
Scenario 5 — You received it by Solh-e-Omra
Solh-e-Omra (صلح عمری) is an instrument of Iranian civil law under which a transferor (mosaleh) conveys ownership to a designated transferee (motesaleh) by a solh contract while retaining a lifetime right of use. The transferee takes possession and enjoyment on the transferor’s death, without probate. It is often likened to a life estate with a remainder interest, though the analogy is imperfect.
Our analysis is that Solh-e-Omra is not an inheritance for purposes of § 560.543, because title passes under the solh contract during the transferor’s lifetime rather than at death. If that is right, the inheritance path does not reach it.
But that conclusion points straight at the other path. If title passed under the solh contract, then the question becomes when the contract was executed. If the instrument conveyed the relevant property interest before U.S. person status attached, the acquisition path may apply — even though the client took possession years later. Whether it did convey that interest, and when, is the question the next paragraphs turn to.
Where the relevant interest was acquired after U.S. person status attached and was not inherited from a person in Iran, § 560.543 does not establish authorization. That is not the same as saying a specific license is required — the step set out earlier applies here too. A specific license is needed only if the proposed activity is otherwise prohibited and no exemption or other authorization reaches it.
We are not aware of any OFAC guidance, FAQ, or published interpretation addressing Solh-e-Omra by name. The analysis above is ours, applying the regulation to an instrument of Iranian law. Anyone representing that OFAC has ruled on this instrument is overstating the record. Where the amounts are significant, the conservative course is to seek OFAC’s own view rather than rely on anyone’s reading.
Document to find first: the dated solh deed — the complete instrument, with any amendments, not just its date. The date is necessary but it is not sufficient. What matters is what the deed actually did: which interest passed, what rights the transferor retained, whether the transfer was conditional or revocable, and how it takes effect under Iranian law. A deed that turns out to have conveyed nothing until death is a different case from one that conveyed ownership immediately. And even where the instrument puts the client on the acquisition path, every other condition in this article still applies — subsection (b), the parties, and the payment route.
Scenario 6 — The property is your mehrieh
A client’s marriage contract fixed her mehrieh as a specified property in Iran. She married before emigrating, but only obtained a court order enforcing the mehrieh last year, well after becoming a U.S. citizen. The instinct is to treat the enforcement date as the acquisition date. That instinct may be wrong, and the reason matters.
Article 1082 of the Iranian Civil Code provides that “[i]mmediately after the performance of the marriage ceremony the wife becomes the owner of the marriage portion,” and may dispose of it as she wishes. If that is how the arrangement operated here, the property interest vested at the marriage — before U.S. person status attached — and the later court order enforced an existing entitlement rather than created a new one. On that reading the acquisition path may well reach the sale, and the enforcement date is beside the point.
The question that decides it is one of Iranian law, not U.S. sanctions law: what the marriage contract actually fixed. A mehrieh specified as a particular property is treated differently from one expressed as a sum of money or a fungible obligation, where what the wife holds is a debt rather than ownership of an identified asset. The instrument has to be read before anything is assumed about when, or whether, a property interest was acquired.
None of this is an OFAC answer. The regulation speaks of acquisition without addressing mehrieh, and we are aware of no OFAC guidance on the instrument. What we can say is that “she enforced it after naturalising, so she acquired it after naturalising” is a conclusion the Iranian Civil Code does not obviously support, and it should not be the working assumption.
Scenario 7 — You received it in an Iranian divorce settlement
Property transferred under a divorce decree or settlement follows the same logic as mehrieh: it is neither an inheritance nor, by itself, an acquisition before status. The determinative fact is when the property interest actually passed, relative to when U.S. person status attached.
Here is the trap, and we had it wrong in an earlier version of this article. It is tempting to say that a settlement concluded while the client was living in Iran sits on the acquisition path. It does not follow. Section 560.314 makes U.S. citizens and permanent residents U.S. persons wherever located — a client can be living in Tehran, in an Iranian courtroom, and be a U.S. person the entire time. Residence in Iran proves nothing about status. Read the decree, the settlement, the deed, and any earlier interest the client already held, and fix the status timeline independently.
Scenario 8 — You bought it after becoming a U.S. person
A client bought land near Shiraz in 2022, three years after receiving a green card, intending it as a retirement home.
Not covered on the sale side, and the purchase raises a separate and more serious question. Neither path is available: acquisition postdates U.S. person status and the property was not inherited. More importantly, § 560.207 provides that “any new investment by a United States person in Iran … is prohibited,” and § 560.316 defines new investment to include “[a] commitment or contribution of funds or other assets.” A purchase of Iranian real estate by a U.S. person has to be analyzed against that language.
We stop short of declaring every such purchase a prohibited new investment, because we located no OFAC guidance addressing residential or personal-use real property under § 560.207 specifically, and the outcome may depend on the facts. What we will say is that this is not a detail to be mentioned in passing. Clients frequently volunteer such a purchase casually, as background, without recognizing that they may have described the most serious fact in the file, and it needs individualized advice rather than a rule of thumb.
Scenario 9 — You inherited it, but the decedent was not in Iran
A client’s mother, a U.S. citizen living in Los Angeles, died owning an apartment in Mashhad that she had kept since the 1970s. The client inherited it in 2025, long after becoming a U.S. citizen herself.
This is an open question, and we treat it as one. The inheritance path requires property “inherited from persons in Iran.” The decedent here was a person in the United States, not in Iran, even though the property is Iranian. The acquisition path also fails, because the client acquired after U.S. person status attached.
Because “persons in Iran” is undefined in the ITSR, we do not think a confident answer is available from the text alone. A client in this posture should not assume the general license covers them, and should not assume it excludes them either. This is a fact pattern for a considered opinion, not a rule of thumb.
Scenario 10 — The property is held through a company
Section 560.543 authorizes “individuals who are U.S. persons.” A U.S. corporation or LLC that owns Iranian property cannot use the license, even though § 560.314 defines “U.S. person” to include entities. The general license is narrower than the definition.
Separately, § 560.543(b)(1) excludes “the wind-down of commercial enterprises in Iran.” Whether a disposition of shares or a business interest amounts to such a wind-down is a fact question; the regulation does not announce a categorical rule for every form of business interest, and this should be analyzed rather than assumed in either direction.
Scenario 11 — Your parent sold the property and wants to send you the money
A client’s father owns a house in Tabriz. Assume he is not a U.S. person. He sells it himself, in his own name, and wants to wire the proceeds to his daughter in Virginia so she can buy a home.
The daughter cannot establish § 560.543 coverage merely because her gift originated from her father’s property sale. She did not sell property she acquired before becoming a U.S. person, and she did not inherit anything — her father is alive and the property was his. She is receiving money. The authorization in § 560.543 runs to the individual U.S. person selling their own qualifying property, so her father’s sale does not supply her with one.
Change the assumption and the picture changes. If the father were himself a U.S. person — a permanent resident living in Iran, say — his own sale and the transfer of his own proceeds would need their own § 560.543 analysis, and the daughter’s receipt of a gift from him would still have to be analysed separately. Two transactions, two answers, and the authorization for one says nothing about the other.
What she is actually proposing is a personal funds transfer from Iran, which is the authority OFAC stayed indefinitely on August 24, 2026. It has to be analyzed as what it is rather than as a property sale wearing a different coat.
The same caution applies one step further along. Where an estate sells property and then distributes cash to a beneficiary, the beneficiary has received a distribution — not necessarily “inherited property” that the beneficiary then sold. Identify who held title, who sold, and what legal interest actually passed to the client. The answer frequently differs from how the family describes it.
Scenario 12 — Mixed interests in the same property
A client inherited a one-quarter share of a Tabriz building from her mother in 2019, then bought out a cousin’s quarter share in 2023, three years after naturalizing. She now wants to sell the half she holds.
The two halves do not travel together. The inherited quarter sits on the inheritance path. The purchased quarter was acquired after U.S. person status and was not inherited, so § 560.543 does not reach it — and the 2023 purchase itself needs the § 560.207 new-investment analysis from Scenario 8. Coverage of one interest does not launder the other because they happen to sit in the same building and will be sold in one contract.
The same discipline applies where several U.S. persons hold shares acquired in different ways, or where a property has been producing rental income. A rental history does not by itself make the sale an excluded commercial-enterprise wind-down under § 560.543(b)(1); equally, calling a business liquidation a “property sale” does not bring it inside the license. Identify what is being sold, how it is held, who holds it, and what each person did during the holding period. Then allocate the proceeds in a way the analysis can actually support.
Summary of scenarios
How it was acquired | Timing vs. U.S. person status | Authority for the sale and transfer | What that means |
Purchase | Before | General license — § 560.543(a), acquisition path | No application to OFAC |
Purchase | After | No general license under § 560.543 | Analyze whether the sale is prohibited and whether anything else authorizes it; the purchase itself needs separate § 560.207 analysis |
Inheritance from a person in Iran | Before or after | General license — § 560.543(a), inheritance path | No application to OFAC; no timing limit |
Inter vivos gift | Before | General license — § 560.543(a), acquisition path | No application to OFAC |
Inter vivos gift | After | No general license under § 560.543 | Specific license if the sale is prohibited and nothing else authorizes it |
Solh-e-Omra | Depends on the instrument | General license may apply — § 560.543(a), acquisition path | Depends on what interest passed, when it passed, and the other conditions |
Solh-e-Omra | Interest acquired after status | No general license under § 560.543, on our reading | Specific license only if the activity is prohibited and nothing else authorizes it |
Mehrieh | Depends on the marriage contract | General license may apply — § 560.543(a), acquisition path | Civil Code art. 1082 may place acquisition at the marriage, not at enforcement |
Mehrieh | Enforced later by court order | Coverage depends on when the property interest was acquired | Later enforcement alone does not establish that date; read the instrument |
Divorce settlement | Follows when the interest passed | General license may apply if before status | If acquired afterward and not inherited from a person in Iran, § 560.543 does not establish coverage — evaluate other authority |
Inheritance from a decedent not in Iran | After | Unresolved — “persons in Iran” is undefined | Do not assume either way; needs a considered opinion |
Any, held by a U.S. company | Any | No general license — § 560.543 reaches individuals only | Identify the actual seller and asset; entity structure needs its own analysis |
Cash from a parent’s own sale | Any | Not a § 560.543 transaction — the parent sold their own property | Analyze as a funds transfer; § 560.550 is stayed |
Estate sells, then distributes cash | Any | Depends on what interest vested in the beneficiary, and when | Establish who held title and who sold before classifying it |
Mixed interests in one property | Each interest on its own date | Analyze each share separately | Coverage of the inherited share does not reach the purchased share |
Every licensing answer in the table is conditional on the whole transaction, not just the acquisition fact in the left-hand column: subsection (b)’s exclusions, every party in the chain, and the payment route all still have to clear. A word on what the two licence columns mean. A general license is self-executing: a client whose facts fit inside it, and who satisfies every one of its conditions, may act without asking OFAC for anything.
Some are codified in the regulations and others are published separately on OFAC’s website. A specific license must be applied for in advance, and the transaction stays prohibited while the application is pending. The two are not interchangeable, and the gap between them has widened considerably during 2026 for the reasons set out below.
What § 560.543 does not authorize, in any scenario
Even where a client sits squarely on one of the two paths, subsection (b) carves out three things. The license does not authorize the wind-down of commercial enterprises in Iran; it does not authorize re-investing the proceeds in Iran; and it does not authorize the exportation or reexportation to Iran of any goods, including software, or technology.
The second of these catches people. A client who sells an apartment and puts the proceeds into another Iranian asset — a second property, a business, gold — is doing something the general license does not authorize, even though the sale itself was authorized. Section 560.543 permits the proceeds to be transferred to the United States; it does not authorize their redeployment inside Iran.
Moving the money: where authorized sales still go wrong
Clients treat the sale as the hard part and the transfer as paperwork. It is the reverse. A perfectly licensed sale can still produce an unlawful transfer.
Your bank’s authority is borrowed from yours. Section 560.516 permits a U.S. depository institution or registered broker-dealer to process an Iran-related transfer only where it “arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction that has been authorized by a specific or general license issued pursuant to, or set forth in, this part and does not involve debiting or crediting an Iranian account.” Without an authorized underlying transaction, the bank has nothing to stand on.
That last condition is narrower than it reads, in two ways. Section 560.320 defines the term as “accounts of persons who are ordinarily resident in Iran, except when such persons are not located in Iran, or of the Government of Iran, an Iranian financial institution, or any other person whose property and interests in property are blocked pursuant to § 560.211 of this part, maintained on the books of either a United States depository institution or a United States registered broker or dealer in securities.”
Two limits do the work there. First, the account must be booked at a U.S. institution — a seller’s own account inside Iran is not an “Iranian account” for this purpose, whatever else may be true about dealing with that bank. Second, the ordinarily-resident category carries its own exception for persons who are not located in Iran. Read together, the condition is considerably tighter than practitioners often assume, and it should be applied as written rather than as a general prohibition on anything with an Iranian connection.
Section 560.516 does not authorize your direct dealings with an exchange house.
This limit is missed constantly and has been published since October 22, 2012. OFAC FAQ 242 states: “The authorizations set forth in section 560.516 of the ITSR do not allow a U.S. person who is authorized to engage in the underlying transaction to deal directly with money service businesses (MSBs) or hawalas, wherever located.” The same FAQ adds that those authorizations “do not preclude United States depository institutions or United States registered brokers or dealers in securities from engaging or dealing with third-country MSBs or hawalas in the processing of the authorized transfers pursuant to section 560.516.” Since much Iran-to-U.S. value moves through sarrafi and comparable intermediaries, this distinction frequently decides whether a lawful sale yields a lawful transfer. The bank may use that channel. The client cannot rely on § 560.516 to deal with that intermediary directly; any separate authority would have to be established, and we are not aware of one that ordinarily applies.
Screening a name list is not diligence. Section 560.211(b) blocks all property and interests in property of any Iranian financial institution within U.S. jurisdiction or a U.S. person’s possession or control, whether or not that institution appears by name on the SDN List. Section 560.425 separately provides that an entity in which blocked persons hold, directly or indirectly, “a 50 percent or greater interest” is itself blocked “regardless of whether the entity itself is identified” as blocked. On September 30, 2026, OFAC amended § 560.211 to add paragraph (c)(1)(iii), importing Executive Order 13902’s blocking criteria into the ITSR, and amended § 560.303 to apply a broader definition of “Iran” for that provision (91 Fed. Reg. 61,759, eff. Sept. 30, 2026). FAQ 401 works through how indirect ownership operates in layered structures, which is the form these questions usually take.
That universe is still growing, which is why screening has to happen on the day. Paragraph (c)(1)(iii)(A) reaches persons determined to operate in the construction, mining, manufacturing or textiles sectors “or any other sector of the Iranian economy as may be determined by the Secretary of the Treasury,” and determinations have been arriving steadily. On October 1, 2026 OFAC determined that section 1(a)(i) of E.O. 13902 applies to the automotive and rail sectors, effective that date, and designated Iran Khodro, SAIPA, Pars Khodro, Zamyad, the Islamic Republic of Iran Railway Company and Raja Passenger Trains among others. OFAC amended FAQ 831 the same day, revising the definition of the financial sector of the Iranian economy, which it describes as covering Iranian financial institutions and providers of economic or financial services in or involving Iran. A counterparty who was clean in September may not be in November.
Third-country banks are under more pressure than most clients realise. On October 5, 2026, OFAC published a Notice to Foreign Financial Institutions Conducting Business with Iran. Its language is unusually direct: institutions still transacting with sanctioned Iranian banks “could be targeted at any time without advance notification” and should “take immediate action to terminate such activity and relationships.” The notice reaches institutions that serve Iranian banks’ subsidiaries or branches in third countries, warns of civil and criminal exposure where Iran-related business causes a U.S. person to violate sanctions, and cites Treasury’s 2026 actions against Banque Misr UAE, Türkiye-based Golden Global Bank, and VTB Bank as examples. OFAC amended FAQ 156 the same day, describing how Treasury imposes strict conditions on, or prohibits, a foreign institution’s U.S. correspondent and payable-through accounts, with prohibited institutions added to the CAPTA List.
The practical effect for a property seller is that the intermediary bank in Istanbul or Dubai that handled this kind of transfer a year ago may now refuse it, or may be gone. Confirm the route is live before the closing, not after. And note that a general license under the ITSR does not speak to another program — General License L authorises transactions involving Iranian financial institutions blocked under E.O. 13902 only where the underlying activity is “authorized, exempt, or otherwise not prohibited” under the ITSR, and expressly does not authorise anything still prohibited by the ITSR, E.O. 13902, or any other part of 31 C.F.R. chapter V. It is not blanket permission to use an Iranian bank.
Who actually blocks the money — the bank, not OFAC
Clients picture OFAC reaching into the payment system and seizing a wire. That is not how it works, and the difference matters for what you do about it.
OFAC addresses this directly in FAQ 51, answering the question “I believe OFAC may have blocked my funds. How can I get my funds released?” OFAC does not hold blocked funds. U.S. financial institutions block them and report the blocking to OFAC, and “authorization from OFAC is required for U.S. financial institutions to release such blocked property.” The decision is made inside the bank, by its sanctions compliance function, usually triggered by screening software — and OFAC’s own guidance notes that the relevant staff sit at headquarters rather than at a branch.
So the sequence is: your bank stops the payment, your bank decides what it is, and your bank reports it. The institution ordinarily makes the initial blocking determination under the applicable sanctions requirements. Where the property was correctly blocked, FAQ 51 is explicit that “authorization from OFAC is required for U.S. financial institutions to release such blocked property.” Where it was not — the error cases described below — the institution itself may have a route, which is why establishing what kind of stop occurred comes before anything else.
There are two different outcomes, and they are not equally bad. Where the transaction is prohibited but no blocked person has an interest in it, the institution generally rejects it and the funds go back where they came from. Where a blocked person or blocked property does have an interest, the institution blocks the funds. Section 560.213(a) requires a U.S. person holding funds subject to § 560.211 to “hold or place such funds in a blocked interest-bearing account located in the United States,” and only OFAC-authorized debits may be made from it. The practical difference is large: a rejection returns the money and leaves the client free to try again properly, while a blocking leaves it in an account nobody can touch without authorization from OFAC.
Both are reported. A blocking must be reported to OFAC within 10 business days under 31 C.F.R. § 501.603(b)(1)(i), and blocked property is reported again annually — property held as of June 30 must be reported by September 30 under § 501.603(b)(2). A rejected transaction must be reported within 10 business days under § 501.604(c).
The first move is to get the bank to put it in writing. Before anyone applies for anything, ask the institution four questions and keep the answers: which institution actually holds the funds, whether the payment is still under review or has been rejected or blocked, what sanctions authority was cited, and whether a blocking report was filed and under what reference. A delay is not a blocking, and a great deal of expensive activity gets started on the assumption that it is. Preserve the original payment instructions alongside the bank’s replies.
Then find out which kind of stop this is. Four things can happen to a payment, and they are not the same event: it can be delayed in review, rejected, correctly blocked, or blocked because of a false match. That last possibility is worth testing rather than assuming away — common Iranian family names and variable transliteration give screening systems a good deal to catch on — but it is equally worth not assuming in the client’s favour. We have no basis for telling anyone how often Iran-linked stops turn out to be mistaken identity, and we are not going to guess. What matters is that the four outcomes carry different remedies, so the category has to be established before anything is filed.
And do not expect OFAC to settle the question for you. FAQ 5, which OFAC refreshed on September 9, 2026, sets out how an institution should work through a screening alert — identify the list involved, test the alert against the full entry using date of birth, identification numbers, nationality and address, and escalate where several details line up — and it states that OFAC does not confirm potential matches or false positives. The judgment belongs to the institution. That is why the documentary package matters so much: the person deciding whether your client is the name on the list is a compliance officer at a bank, working from whatever is in front of them. The same FAQ directs that officer to check whether a general or specific license applies before blocking or rejecting, which is a further reason the citation to § 560.543 belongs on the payment instruction.
If the property was blocked in error, OFAC FAQ 1196 is the relevant guidance. Where property was blocked and reported in error because of mistaken identity or a typographical or similar error, the institution may unblock it and file an unblocking report under 31 C.F.R. § 501.603(b)(3), citing the FAQ rather than a license. OFAC also maintains a Compliance Release process under § 501.806 for exactly those cases. Two limits matter in practice: only the organization that blocked the property can use that process — if a correspondent bank blocked it, the client’s own bank cannot fix it — and the route is unavailable where the property was correctly blocked and the facts later changed. The same FAQ adds a point worth remembering: where a person is removed from the SDN List, neither a specific license nor a Compliance Release is needed to unblock that person’s property, though any independent basis for the block has to be ruled out first. Unblocking property in which a blocked person genuinely holds an interest, without OFAC authorization, exposes the institution to civil penalties, which is why banks are slow to accept that a match was wrong.
If the property was correctly blocked, release requires an authorization that expressly permits it. Section 560.502(f) is the controlling point: no license authorizes transfers or payments from blocked property, or debits to blocked accounts, unless it explicitly says so. That authorization can in principle be general or specific — but § 560.543 is not one of them, and a client should not assume that a licence covering their property sale reaches the release of blocked funds. Where no existing authorization applies, a specific license must be obtained, applied for under 31 C.F.R. § 501.801 through OFAC’s Application Portal. OFAC generally will not process a release request without a corresponding blocking report on file, which means the client first has to get the bank to identify the institution that filed it — not always the institution the client banks with.
And an unblocking application is very likely inside the September 2026 presumption of denial. The Statement of Licensing Policy establishes “a presumed denial for licensing requests to engage in activities which are prohibited by the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. part 560, and other Iran-related authorities.” It does not name unblocking applications, and we once read that silence as leaving room. We no longer do. OFAC’s own licensing page gives release of blocked funds as its example of applying for authorization “to engage in a transaction that otherwise would be prohibited,” which places an unblocking request squarely inside the category the policy describes. No client should proceed on the assumption that blocked funds can be recovered promptly, or at all.
Which is why the whole strategy is prevention.
What to do before the money moves
Reference the license on the payment. This is not a tactic; it is what the regulation tells you to do. Section 560.502(g) provides that “[a]ny payment relating to a transaction authorized in or pursuant to this part that is routed through the U.S. financial system should reference the relevant Office of Foreign Assets Control general or specific license authorizing the payment to avoid the blocking or rejection of the transfer.” For a qualifying property sale, that reference is to 31 C.F.R. § 560.543. A payment instruction that carries the citation is a payment instruction the compliance officer can resolve; one that does not is an unexplained Iran-linked transfer.
Go to the bank’s sanctions compliance function, not the branch, and go before the wire. Give them the file in advance: the deed showing how and when the property was acquired, the succession certificate where relevant, the evidence of when U.S. person status attached, the identity of every party in the chain, and the citation to § 560.543. Be clear-eyed about what this buys. There is no pre-clearance procedure in the regulations, and a bank’s comfort is not an OFAC authorization. What it buys is that the person who receives the alert already has the explanation, instead of meeting the transaction cold.
Consider asking OFAC itself. Through the same Application Portal used for license applications, OFAC also provides interpretive guidance about how its authorizations apply to a particular situation. A request for interpretive guidance is not a license application — it asks OFAC to confirm that an existing general license reaches the facts. For a significant transaction with an unusual acquisition history, that is the closest thing available to advance certainty. It also puts the facts in front of the agency and takes time, and both of those should be weighed deliberately rather than by reflex.
Choose the receiving institution before you choose the closing date. A license is permissive, not mandatory. Section 560.502(c) provides that an authorization removes a prohibition “but only to the extent specifically stated by its terms,” and that it does not create “any right, duty, obligation, claim, or interest in, or with respect to, any property which would not otherwise exist under ordinary principles of law.” Nothing in § 560.543 obliges any bank to carry out the transfer. Institutions make their own risk decisions, and some decline Iran-linked business whatever the authorization. Confirm the receiving bank will take the funds before anyone in Iran signs anything.
Keep the audit trail, and keep it for ten years. Section 501.601 requires every person engaging in a transaction subject to this chapter to keep “a full and accurate record of each such transaction,” available for examination “for at least 10 years after the date of such transaction” — and that applies whether or not the transaction was licensed. Where property has been blocked, records must be kept for the whole period of the blocking and for at least ten years after it is unblocked. If a question arises later — from the bank, from OFAC, or inside an immigration filing — the file assembled before the transfer is the answer. Assembling it afterward is a different and much worse exercise.
One thing a license will not do for you: fix the past. Section 560.502(a) provides that an authorization does not validate transactions completed before it was issued unless it specifically says so. A client who already moved money through an unauthorized channel does not cure that by obtaining a license afterward unless the authorization expressly provides otherwise — and whether any enforcement exposure follows is a separate question from whether the later transaction is authorized. Advise on that footing rather than encouraging anyone to paper over it.
Tax and reporting run on a separate track
An OFAC authorization settles whether a transaction is permitted under sanctions law. It settles nothing about tax. These are different regimes with different definitions, different filings, and different penalties, and a client who satisfies one has not thereby satisfied the other. Nor does filing a tax form authorize anything under sanctions law.
Income tax. U.S. citizens and resident aliens are generally taxed on worldwide income. A sale of Iranian property can have U.S. tax consequences even if the proceeds never leave Iran. The taxable amount is gain, not the sum transferred — basis, adjustments, and currency translation all bear on the result, and the two figures are rarely the same.
Basis depends on how the property was acquired, and the two routes diverge sharply. For inherited property the general rule is the fair market value on the date of the decedent’s death, whether or not an estate tax return is filed, with an alternate valuation date available only where the executor files Form 706 and elects it. For property received as a lifetime gift the rule is different: the recipient generally takes the donor’s adjusted basis for purposes of computing gain, with separate rules for loss and possible adjustments for gift tax paid. That means a gift can carry decades of unrealized appreciation with it, while an inheritance generally does not. For Iranian real estate both routes make early documentation valuable — contemporaneous valuation evidence in the first case, the donor’s own acquisition records in the second — because reconstructing either years later, in a currency that has moved sharply, is difficult.
One related trap. Iranian nationality alone does not determine anyone’s U.S. tax classification. Whether a donor or decedent is a nonresident alien turns on U.S. citizenship and residence under the applicable tax rules, each of which has to be examined separately — a U.S. citizen living in Tehran is not a nonresident alien, whatever passport they also hold. The sanctions question and the tax-status question are answered separately, and assuming the second from the first is how reporting obligations get missed.
Foreign gifts and bequests. Form 3520 reporting generally applies where a U.S. person receives more than $100,000 during the tax year in gifts or bequests from a nonresident alien individual or foreign estate, with each gift over $5,000 separately identified and aggregation rules in play. The reporting event is the receipt, which is not necessarily the later wire into a U.S. account.
Foreign accounts. The FBAR (FinCEN Form 114) generally applies where the aggregate value of foreign financial accounts exceeds $10,000 at any time during the calendar year. Form 8938 is a separate requirement with its own thresholds, which turn on filing status and residence: for an unmarried individual, or a married individual filing separately, living in the United States, more than $50,000 on the last day of the year or more than $75,000 at any point during it; for married individuals filing jointly and living in the United States, generally $100,000 and $150,000; higher figures again for those living abroad. Note what is not reportable on either form: directly held foreign real estate. The apartment itself does not go on an FBAR; an Iranian bank account holding the proceeds very likely does.
Iranian taxes paid on the sale. Do not assume a U.S. foreign tax credit. Iran is one of the countries identified under the sanctioned-country rules of section 901(j), and IRS Publication 514 for 2025 lists Iran among them, which means a credit for income taxes paid or accrued to Iran is generally unavailable. A deduction may be available where a credit is not, and the rules should be confirmed for the specific tax year, since this list changes.
Physically carrying funds. Transporting currency or monetary instruments exceeding $10,000 into or out of the United States triggers a FinCEN Form 105 report under 31 C.F.R. § 1010.340. That filing is a currency-reporting obligation. It is not a sanctions authorization, and it does not make an otherwise unauthorized movement of value lawful.
Why the fallback is no longer what it was
Guidance written before this autumn — including our own earlier version of this article — treated the specific license as a real, if slow, alternative for clients outside the general license. That assumption no longer holds.
On September 10, 2026, OFAC issued a Statement of Licensing Policy on Iran-Related Requests, signed by Director Bradley T. Smith. Effective immediately, OFAC is considering Iran-related specific license applications with a presumption of denial. The stated exceptions are narrow: where a license is required by law, or in exceptional and urgent circumstances such as risk to life, limb, or environmental safety — and OFAC’s policy states that persons applying through its Licensing Portal “should provide written attestation demonstrating these circumstances”. The policy also suspends earlier Statements of Licensing Policy that had signaled a favorable posture toward particular activities. It remains in effect until amended or rescinded. There is no carve-out for family, personal, inheritance, or property matters.
The surrounding environment moved as well. On August 24, 2026, OFAC stayed §§ 560.550 (noncommercial personal remittances), 560.544, and 560.554 indefinitely and suspended Iran General Licenses F and G (91 Fed. Reg. 54,957, 54,958). On September 8, 2026, it stayed §§ 560.522, 560.528, and 560.529 and suspended General License J-1 (91 Fed. Reg. 57,511). The accompanying wind-down licenses, General License BB and General License DD, expired on September 8 and September 23, 2026. Section 560.543 was not among the provisions stayed. We checked on October 11, 2026: it carries no stay notation, and no Federal Register rule or OFAC action since September 30 has touched it.
A note on how to run that check, worth passing to clients as a working habit. The eCFR describes itself as an editorial compilation updated daily, and each page carries a currency date — so read that date, then look past it to any later Federal Register amendments and to the licences and notices OFAC has issued since. Timing matters here because OFAC suspends general licenses by notice on its own website, effective immediately, with the Federal Register and the CFR following: the stay of § 560.550 took effect on August 24 and reached the Federal Register on August 26. OFAC’s Recent Actions page is the quickest index of what has just happened, but it is an index — the operative documents are the rules, licences, orders and notices it links to, and those are what should be read before acting.
The practical consequence for the scenarios above is sharp. Section 560.543 remains available for qualifying transactions, subject to its own conditions and to all other applicable sanctions restrictions. A client off both paths should be told candidly that the application route now starts from a presumption against them, and should not be encouraged to move money through an unlicensed channel while that application sits pending.
The documents that decide the case
Two dates do much of the work in most matters — when the property was acquired, and when the client became a U.S. person — though as the sections above show, they are not the only variables. Before a consultation, clients should gather:
• The title deed (sanad), showing the date and manner of acquisition.
• For inheritance — the death certificate and the certificate of succession (gavahi-ye enhesar-e verasseh).
• For a gift or solh — the dated deed of transfer.
• For mehrieh — the marriage contract and any court order enforcing it.
• Naturalization certificate or permanent resident card, plus a record of earlier entries to and periods of presence in the United States.
• Certified English translations of each Persian-language document.
Where those dates are close together, or where the acquisition instrument is ambiguous, the answer should be settled before anything is listed for sale — not after a buyer is waiting.
A caution about generic advice
Guidance written about “a sanctioned country” in the abstract is unreliable, and this article is about Iran specifically. Section 560.543 is a provision of the Iran program, and nothing in it speaks to property in any other sanctioned country. Each program is a separate regulation with its own prohibitions, definitions, and general licenses, and those programs move independently of one another — Syria’s designation as a State Sponsor of Terrorism was removed on August 24, 2026, the same day Iran’s personal remittance license was stayed. Whether a comparable authorization exists under another country program is a question to be researched in that program, not assumed from this one.
Authorities
The U.S. sanctions propositions in this article trace to the sources below, and they should be checked again before any transaction, because several changed during 2026 and may change again. Two categories do not rest on these authorities and are identified as such in the text: the descriptions of Iranian-law instruments, and our observations about how matters tend to arrive in practice.
The Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560
• § 560.543 — sale of real and personal property in Iran and transfer of proceeds
• § 560.314 — definition of United States person
• § 560.502 — effect of a license, including (a) on past transactions and (g) on referencing the license in payment instructions
• § 560.552 — U.S. citizens residing in Iran; § 560.213 — holding of blocked funds in interest-bearing accounts
OFAC guidance
• FAQ 640 — the November 5, 2018 amendment to § 560.543, the services carve-out, and other sanctions programs
• FAQ 242 — processing transfers; direct dealings with MSBs and hawalas
• FAQ 51 — who holds blocked funds and how release is sought
• FAQ 1196 — property blocked in error, Compliance Release, and delisting
• FAQ 401 — the 50 Percent Rule and indirect ownership
• FAQ 5, updated September 9, 2026 — evaluating a screening alert; OFAC does not confirm matches or false positives
• FAQ 58 and FAQ 76, both updated September 9, 2026 — licence application timing, and reconsideration of a denial
• FAQ 156, as amended October 5, 2026 — conditions on foreign financial institutions and the CAPTA List
• General License L — certain transactions involving institutions blocked under E.O. 13902
• Specific licenses and interpretive guidance — OFAC’s application portal
2026 changes
• Statement of Licensing Policy on Iran-Related Requests, September 10, 2026 — presumption of denial
• Notice of suspension of certain ITSR general licenses, with the August 24 and September 8 suspensions
• 91 Fed. Reg. 54,957 (Aug. 26, 2026) — stay of §§ 560.544, 560.550, 560.554
• 91 Fed. Reg. 57,511 (Sept. 10, 2026) — stay of §§ 560.522, 560.528, 560.529
• 91 Fed. Reg. 61,759 (Sept. 30, 2026) — amendments to §§ 560.210, 560.211, 560.303
• Determination under E.O. 13902 — automotive and rail sectors, effective October 1, 2026
• OFAC Alert — Notice to Foreign Financial Institutions Conducting Business with Iran, October 5, 2026
• FAQ 831, amended October 1, 2026 — sectors of the Iranian economy under E.O. 13902
I
ranian law referred to in the text
• Civil Code of the Islamic Republic of Iran, article 1082 on the marriage portion. Descriptions of solh-e-omra are drawn from practice rather than from a provision cited here, and are identified in the text as our characterisation.
Recordkeeping, reporting, and tax
• 31 C.F.R. § 501.601 — recordkeeping; § 501.603 — blocked property reports; § 501.604 — rejected transaction reports; § 501.801 — licensing procedures
• 31 C.F.R. § 1010.340 — currency transportation reports (FinCEN Form 105)
• IRS — U.S. citizens and resident aliens abroad; Gifts from a foreign person; Form 8938 and FBAR compared; Publication 551 on basis of assets; Publication 514
Important NoticeOFAC regulations change from time to time. The authorities described above have been stayed, amended, or replaced repeatedly during 2026, and a rule that is accurate today may not be accurate next month. Please consult an OFAC attorney before making any decision or taking any action in this regard. This post is general information only, based on the regulations in effect as of the date of this update. It is not legal advice, and reading it does not create an attorney-client relationship with LexElite Law, PLLC. Outcomes under the ITSR turn on facts specific to each person — when U.S. person status attached, how and when the property was acquired, and who stands in the payment chain. Current as of October 11, 2026. Verify every authority against OFAC’s website, or consult your trusted OFAC attorney, before acting. |
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