US Estate Tax for Canadians Who Own Florida Property

Does the US Take 40% of a Canadian's Florida Condo?

Here is the fear that sends Canadian families to Google at midnight. You own a condo in Naples or Sarasota, you have read that the United States taxes foreign owners at death with only a $60,000 exemption, and you do the arithmetic on a home worth ten or twenty times that number. The result looks like a six-figure bill waiting for your children.

For Canadians, that arithmetic is wrong, and it is wrong in your favor. The US-Canada tax treaty contains a provision, added in 1995, that most general articles about "foreign owners" skip entirely because it applies only to Canadian residents. Under it, virtually every ordinary snowbird estate owes no US estate tax at all under current law. What survives is a filing obligation that is real, unavoidable, and easy to get wrong. This page walks through both halves, why the tax is usually zero, and why your executor still has work to do. It is one piece of the bigger picture on our Canadian snowbird hub, alongside how to take title when you buy, what happens when you sell, and how long you can stay each winter.

The Default Rule Every Non-Resident Starts With

Start with the rule the treaty rescues you from. A person who is neither a US citizen nor a US resident is taxed at death only on US assets, meaning US real estate, property physically kept in the US, and shares of US companies. But the exemption on those assets is $60,000, against the roughly $15 million a US citizen gets, and above it the rate is graduated, climbing to 40%.

For a foreign owner from a country with no estate treaty, that default bites hard. On a $2,000,000 US property the tax works out to about $733,000, a math we walk through on our non-resident estate tax page using the example of an Israeli owner, because Israel has no estate treaty with the US. A Canadian resident starts from exactly the same default. The difference is that Canada is one of the small number of countries with a death-tax arrangement in its treaty, and for Canadians the arrangement is unusually generous.

The Treaty Rescue: A Prorated Share of the Full US Credit

The treaty replaces the $60,000 regime with a proration. Instead of the token credit a non-resident normally gets, the estate of a Canadian resident is allowed a share of the full US unified credit, the same credit that shelters $15 million for a US citizen in 2026. The share equals the US portion of the estate. Take the value of the US assets, divide by the worldwide estate, and multiply by the full credit. In 2026 the full credit works out to $5,945,800.

Put real numbers on it. A $1,000,000 Naples condo inside an $8,000,000 worldwide estate. The condo is one eighth of the estate, so the treaty credit is one eighth of $5,945,800, which is $743,225. The US tax on a $1,000,000 taxable estate, before any credit, is $345,800. The credit swallows it more than twice over. The US estate tax comes to zero.

That is not a quirk of the example. Because the US rate averages higher as an estate grows, the prorated credit covers the tax on the US share whenever the worldwide estate is at or under the US exclusion, $15 million in 2026. Run the mix any way you like, a $2 million condo in a $14 million estate, or a $400,000 condo in a $900,000 estate. Under current law, the ordinary Canadian snowbird estate owes the IRS nothing at death. Two footnotes keep the math honest. The credit is reduced by any credit already used against lifetime gifts. And the proration floats with Congress. If the US exclusion is ever cut, the credit shrinks with it, a point we come back to under planning.

The Catch: Filing Is Not Optional

Now the half that surprises families. Zero tax does not mean zero filing. The US return for a non-resident's estate, Form 706-NA, is required whenever the US assets exceed $60,000 at death, and the treaty does not raise that threshold by a dollar. Nearly every Florida condo clears it. The return is due nine months after death, and a six-month extension of time to file does not extend the time to pay if tax is owed.

The treaty credit comes with a price tag of its own. It is allowed only if the estate provides the information needed to verify and compute it. In practice that means disclosing the worldwide estate to the IRS, the Toronto house and the RRSP along with the condo. Some families balk at showing the IRS their whole balance sheet, and that is a legitimate conversation to have in advance, because the alternative is paying the default tax. The claim itself is made by attaching a statement to the 706-NA identifying the treaty position and showing the credit computation. If you have read about Form 8833, the treaty-disclosure form, set it aside. That form belongs to income-tax returns and is not the vehicle here. The estate return carries its own treaty statement.

While all of this is pending, the practical squeeze is the transfer certificate. US banks, brokers, and title companies routinely refuse to release a deceased foreign owner's assets until the IRS issues one, and the IRS issues it only after the 706-NA is resolved. A family that ignores the filing because "the tax is zero" can find the condo unsellable and the account frozen. The paperwork, not the tax, is the trap.

The Marital Credit: Doubling the Shelter for a Spouse

The treaty holds a second gift for married couples. Property passing to your surviving spouse can earn a marital credit in addition to the prorated unified credit, worth up to the same amount again, capped at the tax actually imposed on what the spouse receives. In effect, a condo passing to a Canadian spouse can shelter up to double the prorated credit, which pushes the zero-tax outcome well past the point where the unified credit alone would run out.

It is not automatic. The executor must elect the credit on the estate-tax return and irrevocably waive the ordinary US marital deduction, by the same deadline that would apply to a QDOT election. A QDOT, the special trust the US normally demands before giving a non-citizen spouse the marital deduction, is the standard fix for most foreign couples, and we cover it in our guide to estate planning for non-US citizens. The Canadian marital credit substitutes for that entire structure on the right facts, with no trust, no trustee, and one election on one return. The planning point is to make sure your will and your executor instructions leave the election available rather than accidentally foreclosing it.

What the Treaty Does Not Fix: Lifetime Gifts

The treaty article that does all this good work covers taxes imposed by reason of death. It provides no credit and no exemption for lifetime gifts. That gap produces the most common self-inflicted wound we see in this area, parents who deed the Florida condo to the children now, "to keep it simple."

A gift of US real estate by a non-resident is taxable by the US, and the giver gets only the $19,000 annual exclusion per recipient (2026), with no lifetime exemption behind it and no treaty relief. A gift to a spouse who is not a US citizen gets a larger annual allowance, $194,000 in 2026, but still no unlimited marital treatment. So a family that deeds an $800,000 condo to two children has made a large taxable US gift, out of an asset that, left alone, would have passed at death with zero US estate tax under the proration. The gift also hands the children the parents' old cost basis, forfeiting the step-up their heirs would receive at death, a point our step-up in basis guide explains. The rule of thumb is simple. For a Canadian, the condo is usually cheaper to keep than to give. If probate avoidance is the goal, there is a deed that does that without making a gift at all, covered under planning below.

The $1.2 Million Small-Estate Rule, Read Correctly

The treaty has one more provision that is widely misquoted, so it is worth reading correctly. For a Canadian whose worldwide estate is US$1.2 million or less, the US may impose estate tax only on property whose sale gain the US could have taxed under the treaty's gains article. You will find summaries online suggesting this exempts the whole US estate for modest families. It does not.

The gains article expressly lets the US tax gains on US real property. So the Florida condo stays fully inside the US estate tax no matter how modest the worldwide estate is; the proration, not this rule, is what protects it. What the small-estate rule genuinely exempts is US stock and similar holdings. A Canadian with a $900,000 worldwide estate that includes a US brokerage account gets the account out of US estate tax entirely. Useful, real, and much narrower than the internet version.

The Canadian Side: Deemed Disposition at Death

Nothing above changes what happens at home. Canada has no estate or inheritance tax; instead, you are treated as having sold everything you own at fair market value the moment before death, and the accrued capital gain, including the gain on the Florida condo, is taxed on your final Canadian return. A rollover is available for property passing to a spouse or a qualifying spousal trust, which can defer that gain to the second death.

So the two countries tax different things. Canada taxes the gain, the US taxes the value, and the treaty stitches the two together so the same dollar is mostly not taxed twice. Where a Canadian estate does owe US estate tax, the treaty lets that US tax offset Canadian tax on the US income and gains of the year of death, including the deemed gain on the very condo that generated the US bill. The mechanics of the final return, the spousal rollover, and the provincial wrinkles are squarely your Canadian accountant's territory, and we say so plainly. We handle the Form 706-NA, the treaty statement, and the Florida side, and we coordinate with the Canadian side rather than practice it.

Planning Levers That Actually Work

For most snowbird families the tax problem is solved by the treaty, which means the real planning is about probate, the spouse, and staying ready for law changes. The levers, honestly labeled.

• A lady bird deed on the condo. It passes the property to your family automatically at death, which avoids a Florida ancillary probate entirely, and you keep full control for life, so you can sell it, mortgage it, or change your mind. To be clear about what it does not do, it avoids probate, not US estate tax (your retained control keeps the condo in your US gross estate) and not Canada's deemed disposition. Your heirs still take with the US basis step-up. Attorney-prepared from $399, or $449 for a couple, plus recording. See our lady bird deed guide and the Canadian-specific notes on our buying-in-Florida page.
• A trust, only with Canadian clearance. A revocable trust also avoids the Florida probate. But moving appreciated Florida property into any trust can have Canadian tax consequences of its own, so it is a step your Canadian accountant must clear first. We build the Florida side only after that conversation.
• Marital-credit readiness. The doubled shelter for a spouse depends on an election and a waiver made on a deadline after death. Wills, beneficiary arrangements, and executor instructions should be drafted so the election stays open.
• Life insurance for larger estates. For worldwide estates above the US exclusion, insurance on your own life is not a US-situs asset, so the proceeds can fund any residual US tax without adding to the taxable pile.
• Watch the exclusion, not the headlines. The $15 million US exclusion is permanent under current law, but the proration floats with whatever Congress sets. If the exclusion ever drops, Canadians with worldwide estates above the new number would owe real US tax on Florida property. The structural work above is what stays valuable under any version of the number.

And if the plan is to sell the condo rather than keep it, a different set of rules takes over at the closing table, starting with a 15% withholding. That is its own page, selling Florida property as a Canadian.

Frequently Asked Questions

Common Situations

The $8 million Toronto estate with the $1 million condo. A Toronto executor assumes the US bill on his late father's Naples condo will be enormous, having read about the $60,000 exemption. The treaty proration produces a credit of about $743,000 against a tax of about $346,000, so nothing is owed. But the estate still files the 706-NA with the worldwide-estate disclosure and the treaty statement, and the condo cannot be sold until the IRS issues its transfer certificate. The family's surprise was not the tax; it was the paperwork.

The parents who almost deeded the condo to the kids. A Windsor couple, tired of cross-border complexity, prepare to sign the condo over to their two children. A consult stops the pen. The gift would be US-taxable with only $19,000 per child excluded and no treaty help, out of an asset that would pass tax-free at death. A lady bird deed gives them the probate avoidance they wanted with no gift at all, and the children keep the stepped-up basis.

The widow and the marital credit. A Montreal woman inherits her husband's Florida home, titled in his name alone, inside a worldwide estate large enough that the prorated credit alone would not cover the US tax. The executor elects the treaty's marital credit and signs the irrevocable waiver on the 706-NA, doubling the shelter for the property passing to her. The tax lands at zero, without the QDOT trust an American advisor had quoted them.

Sources of Law

• Convention Between the United States and Canada with Respect to Taxes on Income and on Capital, as amended by the 1995 protocol: Article XXIX B(2) (prorated unified credit and the information condition), Articles XXIX B(3) and (4) (marital credit; executor election and irrevocable waiver of the marital deduction), Article XXIX B(6) (Canadian relief for US estate tax against death-year US-source income and gains), Article XXIX B(8) (the $1.2 million small-estate rule), Article XIII(1) (gains on real property situated in the other state). irs.gov consolidated treaty text (retrieved August 9, 2026)
• Default non-resident regime: IRC §§2101 to 2108; §2102(b)(1) ($13,000 unified credit, the $60,000 exemption equivalent); §2001(c) graduated rates to 40%; §§2036 and 2038 and §2104(b) (retained control keeps the property in the gross estate); §2105(a) (life insurance on the decedent's life is not US-situs); §1014 (basis step-up for property included in the gross estate).
• Instructions for Form 706-NA: filing required when US-situs assets exceed $60,000 (plus adjusted taxable gifts); due nine months after death; treaty-based return positions claimed by an attached statement; Line 10 marital credit with election, waiver, and computation statement. irs.gov/instructions/i706na (retrieved August 9, 2026)
• 2026 figures: basic exclusion $15,000,000; annual gift exclusion $19,000; non-citizen-spouse annual exclusion $194,000 (Rev. Proc. 2025-32). irs.gov 2026 inflation adjustments (retrieved August 9, 2026). The corresponding full unified credit of $5,945,800 is computed from the §2001(c) rate schedule.
• Non-resident gift tax: IRC §§2501 to 2524 (US real estate is US-situs for gift tax; no lifetime exemption for a non-resident; annual exclusions only).
• Canadian deemed disposition at death (capital gains reported on the final return; spousal rollover): Canada Revenue Agency, Doing taxes for someone who died. canada.ca (retrieved August 9, 2026). Canadian mechanics, elections, and provincial rules are for your Canadian accountant or counsel.

Updated on August 9, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. This article is general information about US tax, treaty, and Florida law, not legal or tax advice, and does not create an attorney-client relationship. Canadian tax questions belong with a Canadian accountant or Canadian counsel; we handle the US and Florida side and coordinate across the border. Your result depends on your specific facts. Do not send confidential information until we have agreed to represent you.