US Estate Tax for Non-Resident Aliens (US-Situs Assets)

The $60,000 Exemption a Non-Resident Gets

Here is the fact that surprises almost every foreign owner of US property. A US citizen or US resident can pass roughly $15 million at death before any federal estate tax applies. A non-resident alien, someone who is neither a US citizen nor a US domiciliary, gets an exemption of only $60,000 on their US-situs assets. That is not a typo. The same $2 million Florida condo that is comfortably inside the exemption for an American is almost entirely exposed for a foreign owner.

"Situs" simply means where an asset is treated as located. A non-resident is taxed only on assets with US situs, not on their worldwide estate. But for the assets that do count, the exposure is real and it starts at a very low number. The good news is that what counts as US-situs is something you can plan around, and how you hold the asset, whether a treaty applies, and whether you carry life insurance all change the final bill. The sections below walk through the math, the situs rules, and the moves that work.

How the Tax Is Actually Computed

You will read in a lot of places that the non-resident estate tax is "40%." That overstates it, and the difference is large enough to matter. The rate is graduated under US law, the same bracket structure a citizen faces, climbing through lower rates and reaching 40% only on the portion above $1,000,000. The $60,000 exemption is delivered as a tax credit, not as a slice taken off the top before the rate applies.

Put real numbers on it. On a $2,000,000 US-situs estate, the graduated tax on the full amount comes to roughly $733,000 after the credit that exempts the first $60,000 is applied. That is about a 37% effective rate, not 40%, and not the $800,000 you would get by wrongly multiplying the whole $2 million by a flat 40%. The bill is large, and you should model it correctly before you decide a structure is worth its cost. We run that model at three values and three holding periods so the decision is concrete rather than a scary round number.

What Counts as a US-Situs Asset

Because a non-resident is taxed only on US-situs assets, the entire planning question turns on which of your assets land on the taxable side of the line. Here is the working cheat-sheet.

• US-situs (taxed). US real estate, tangible property physically kept in the US, and shares of US corporations. The stock counts even if you hold it in a foreign brokerage account, because situs follows the company, not where the certificate sits.
• Not US-situs (not taxed). Stock in a foreign corporation, foreign real estate, US life insurance on your own life, and certain US bank deposits and qualifying portfolio debt.

Two of those non-situs items are planning tools, not accidents. Because shares of a foreign corporation are not US-situs, a foreign company that owns US real estate converts the asset into foreign stock for estate-tax purposes. Because US life insurance on your own life is not US-situs, a policy can pass to your heirs free of US estate tax even from a US insurer. The bank-deposit rule is narrower than people assume, so a large US account is worth checking rather than waving off. If you also sell US real estate, a separate withholding regime applies at closing, which we cover in our guide to FIRPTA withholding.

Planning: Blockers, Debt, and Life Insurance

There is no single move that wins on every measure, so planning is about matching the tool to your facts. Here are the main levers.

• A foreign-corporation "blocker." A foreign company holds the US real estate, so what you own is foreign stock (not US-situs) instead of a US asset. This can take the estate tax to zero, but it brings its own income-tax cost when the property is sold and its own reporting, so it earns its keep mainly on investment property above a meaningful value. Larger structures are co-counseled with an international tax advisor.
• Debt against the property. A mortgage can reduce the taxable value, but only a non-recourse loan nets dollar-for-dollar. A standard recourse mortgage is deductible only in proportion to your US assets against your worldwide estate, so a big loan can shelter far less than its face amount.
• Life insurance. Because a policy on your own life is not US-situs, term insurance sized to the expected tax lets your heirs receive cash to pay the bill without selling the property. For a personal-use vacation home, this is often the cleanest answer.
• Lending instead of owning. If what you actually want is US real-estate income rather than the property itself, a clean fixed-rate mortgage loan into the deal, structured correctly under current law, earns interest free of US income tax and sits outside your US estate entirely. See our guide to the portfolio interest exemption.

One trap drives the choice between a structure and insurance. If you actually use the property as a vacation home, a "naked" foreign-corporation blocker can be pulled back into your estate as if the company did not exist, unless you pay arm’s-length rent on every stay and run the entity as a real business. That is why, for a home you use, direct ownership plus life insurance frequently beats an elaborate structure. For an investment property held at arm’s length, the blocker math often wins. The right call depends on use, budget, and whether US-resident family will inherit. A coordinated US trust can also help heirs avoid a second probate; see our note on the Florida community property trust for the basis-planning side.

Gift Tax Is Different: US Real Estate vs Stock

Many owners assume that if they give the property away during life, they sidestep the estate tax. For a non-resident, the gift-tax rules cut both ways, so the answer depends on what you give.

For gift tax, the situs rules are narrower. Intangibles, including shares of a US corporation, are not US-situs for gifts, so a non-resident can generally give away US stock during life free of US gift tax. US real estate is the opposite. It is US-situs for gifts, so giving away a US condo during life is fully gift-taxable above the annual exclusion, and a non-resident gets no lifetime gift exemption to soften it. In plain terms, giving the condo away during life can cost roughly the same as the estate tax you were trying to avoid.

The smarter sequence is usually to gift cash held abroad, which is not US-situs, and let the recipient or their structure buy the US property. The order of operations is the planning. This is exactly the kind of thing to settle before a purchase rather than after.

Who Counts as a Non-Resident in the First Place

Everything above assumes you are a non-resident, and that word does not mean what it means at the airport. For estate tax the federal regulation is short about it. A resident decedent is one who at death "had his domicile in the United States," and a person acquires a domicile "by living there, for even a brief period of time, with no definite present intention of later removing therefrom."

Read that twice, because citizenship is absent from it and so is a green card. The test is where you live plus what you intend. A green-card holder is ordinarily domiciled here and taxed on a worldwide estate against the roughly $15,000,000 exemption. Somebody on a temporary visa usually is not domiciled here, which is what puts them in the $60,000 world described on this page.

Now the part that surprises people. Failing that test is often the outcome you want. A family in Bogotá with a $2,000,000 Miami condominium and $40,000,000 at home is far better off as a non-domiciliary, because only the condominium is exposed. The same family with $40,000,000 of American assets and almost nothing at home would rather be domiciled here and use the full exemption. Which side of the line helps you is a question about where your money sits, not a question about immigration.

Florida asks a similar question for a different purpose, and the answers can diverge, which is worth knowing if you own a home here. Florida's homestead cases have held for sixty years that a person present on a temporary visa lacks the legal ability to convert a temporary residence into a permanent home. A couple from Switzerland lost their homestead exemption on that reasoning even though they had lived in Charlotte County for five years, held Social Security numbers and Florida drivers' licenses, paid federal income tax, and had recorded a Declaration of Domicile. A man lost the same argument after twenty years here.

Two different tests, then, applied to one set of facts, and a green card that is close to decisive for the federal question is not decisive for the Florida one. The Florida Supreme Court has since held that a non-citizen owner can qualify for the homestead exemption on a second ground entirely, by housing a dependent on the property, and the owners who won that case held temporary visas. So an owner can be a non-domiciliary for estate tax and still hold the Florida exemption. The homestead side is worked through here.

Read the two together and the planning question stops being "am I a resident" and becomes two questions. Where do I want my domicile to sit for the estate tax, and what does my Florida home need in order to be treated the way I expect. They have different answers more often than you would think.

Treaty Relief, and Why Israel Has None

The $60,000 exemption is the default, and for a shortlist of countries a treaty replaces it with something dramatically better. Most writing on this subject stops at "a treaty may help." Here is the actual list and the actual formula.

The United States has an estate or gift tax treaty with fifteen countries. Norway and Sweden are often included in lists you will find elsewhere, and both of those treaties were terminated, so a list of seventeen is out of date.

Nine of the fifteen sit in the shaded rows, and those are the ones that matter most, because their treaties carry a provision that replaces the credit rather than merely dividing up which country taxes what. The nine are Australia, Canada, Finland, France, Germany, Greece, Italy, Japan and Switzerland. The Internal Revenue Service names exactly that set in the instructions to the estate tax return a non-resident's executor files.

Where one of those nine applies, the arithmetic changes completely. Instead of the flat $13,000 credit that produces the $60,000 exemption, the credit becomes the same fraction of the full American credit that the United States share of the estate is of the estate worldwide. The practical translation, and it is a translation rather than the statute, is an exemption of roughly $15,000,000 multiplied by the share of your worldwide estate that sits in the United States.

Run a number through it. A German citizen living in Munich owns a $2,000,000 Florida condominium and has a $10,000,000 estate worldwide. The American share is one fifth, so the treaty exemption is about $3,000,000, the condominium sits well underneath it, and the United States estate tax is zero. The identical condominium owned by a family in Tel Aviv, where no estate treaty exists, is taxed on everything above $60,000, which is roughly $733,000. Same property, same value, and a difference of three quarters of a million dollars decided by which passport is in the drawer.

Three cautions before anyone relies on that. The treaty benefit is claimed rather than granted, so the return has to be filed with a statement saying the position is treaty based and showing the computation. Filing survives the exemption, so a Canadian family that owes nothing still files, and the transfer certificate that releases the asset still has to be obtained. And the nine-country list is the position the Service stated when the instructions went to print, which means a treaty can be renegotiated or terminated, as Norway's and Sweden's were.

Canada is the worked example, since the estate provisions live in Article XXIX B of the income tax treaty and most Canadian snowbirds end up owing nothing while still having to file; see our guide to US estate tax for Canadians. Germany works the same way, and our German-language guide is Erbschaftssteuer USA. The six unshaded countries are not left out in the cold, and their treaties operate differently, by allocating which country may tax an asset and by granting credits for tax the other country charged, rather than by enlarging the American credit.

Israel is not on that list, and neither is India (Indian investors in US stocks and ETFs face the same bare $60,000 exemption with no home-country credit; see our guide for Indian investors). The US and Israel have an income-tax treaty, in force since 1995, but no estate or gift-tax treaty. So an Israeli owner of US property gets no treaty cushion at all and faces the full $60,000 default. It is harsher still because Israel itself imposes no estate or inheritance tax, which means there is nothing on the Israeli side to credit the US tax against. Every dollar of US estate tax is a pure loss. That combination, the worst US default with no offset at home, is why structuring before a purchase matters so much for Israeli buyers. If a non-citizen spouse is part of the picture, the QDOT rules are their own topic; see our guide to estate planning for non-US citizens.

Form 706-NA: Who Files and the 9-Month Clock

When a non-resident who was not a US citizen dies owning US-situs assets worth more than $60,000, their estate must file Form 706-NA, the US estate-tax return for non-residents. It is due nine months after the date of death. A six-month extension of time to file is available, but the tax itself is due at the nine-month mark, so an extension to file is not an extension to pay.

The deadline is not the only pressure. The IRS issues a transfer certificate that releases the US assets, and banks, brokers, and title companies often will not move the property until it clears. That process can take many months, which means a US account or condo can sit frozen while the family waits. Planning ahead, whether through a holding structure, a funded US trust, or life insurance to cover the tax, is what keeps the heirs from being stuck with both a tax bill and a year-long hold on the very asset they need to pay it. We handle the 706-NA filing in coordination with an international tax advisor when a return is required.

How We Work, and When We Co-Counsel

Cross-border work covers a wide range, so we are honest about where our role sits. A straightforward plan, direct ownership paired with life insurance sized to the tax, the Florida-side documents, FIRPTA planning at sale, and the screening that tells you what you actually face, is handled here on a fee quoted up front once we see the facts. For foreign-corporation blockers, two-tier holding structures, treaty positions, and the Form 706-NA mechanics, we co-counsel with an international tax advisor so the structure is built, documented, and filed correctly.

Almost all of this is done by phone and video, which fits clients who are out of the country. If a US purchase is on the horizon, the highest-leverage moment is before you close, when ownership is still a clean choice. Our international and cross-border hub maps how the estate tax, FIRPTA, and reporting forms fit together. If you are about to become a US person yourself, see our guide to pre-immigration tax planning.

Frequently Asked Questions

Common Situations

The Sunny Isles condo in a personal name. A family in Tel Aviv buys a $2 million Florida condo in their own names, as a friend did. They do not realize that at death the US would tax it with only a $60,000 exemption, roughly $733,000, with no US-Israel treaty to soften it and nothing on the Israeli side to credit. Because they use the unit themselves, a blocker would collapse, so the fit is direct ownership paired with term life insurance to fund the tax, plus a US plan so the family avoids a year-long title hold.

The investment building. An overseas investor buys a Florida rental building purely as an investment, held at arm’s length with third-party tenants. Here a foreign-corporation or two-tier holding structure can take the estate-tax exposure toward zero, because the §2036 personal-use trap does not apply. We screen the facts and co-counsel an international tax advisor to build and file the structure.

The US brokerage account. A non-resident holds $1.5 million of US company shares in a foreign brokerage and assumes that because the account is abroad, it is safe. It is not. US stock is US-situs no matter where the account sits. The planning conversation is whether to gift the shares during life (often free of US gift tax) or restructure how they are held.

Sources of Law

• Non-resident alien estate tax: IRC §§2101 to 2108; graduated rates under §2001(c) reaching 40%; the $60,000 exemption equivalent delivered as the $13,000 unified credit under §2102(b)(1). irs.gov
• US-situs lists: IRC §2104 (US-situs, incl. US real estate and US-corporation stock), §2105 (non-situs, incl. foreign-corporation stock, life insurance on the decedent’s life under §2105(a)(1), and certain non-business bank deposits); §2104(b) retained-string taint; Treas. Reg. §§20.2104-1, 20.2105-1.
• NRA gift tax: IRC §§2501 to 2524; intangibles (incl. US stock) non-situs for gifts; US real estate situs for gifts; no NRA lifetime gift exemption beyond the annual exclusion.
• FIRPTA on sale of US real estate: IRC §897, §1445 (15% default gross-price withholding; residence tiers 0% if buyer-occupied and price $300,000 or less, 10% from $300,001 to $1,000,000); Forms 8288 and 8288-B.
• Form 706-NA: United States Estate (and Generation-Skipping Transfer) Tax Return, Estate of nonresident not a citizen of the United States; due nine months after death; transfer-certificate process. No US-Israel estate-tax treaty (income-tax treaty in force since 1995 only). (retrieved 2026-07-11)
• Who is a non-resident: Treas. Reg. §20.0-1(b)(1) ("A 'resident' decedent is a decedent who, at the time of his death, had his domicile in the United States"; "A person acquires a domicile in a place by living there, for even a brief period of time, with no definite present intention of later removing therefrom"; a mere intention to change domicile does not effect the change without actual removal). Citizenship and immigration status are not the test, though both are evidence of intent.
• The Florida homestead line on the same facts, a separate test for a separate purpose, each opinion read in full 2026-09-08: Juarrero v. McNayr, 157 So. 2d 79, 81 (Fla. 1963); Alcime v. Bystrom, 451 So. 2d 1037 (Fla. 3d DCA 1984) (twenty years' residence insufficient without a permanent visa); DeQuervain v. Desguin, 927 So. 2d 232, 233 (Fla. 2d DCA 2006) (five years in the county, Social Security numbers, drivers' licenses, federal income tax and a recorded Declaration of Domicile, "however, they held only temporary visas"); Lisboa v. Dade County Property Appraiser, 705 So. 2d 704 (Fla. 3d DCA 1998) (pending political asylum sufficed); Garcia v. Andonie, 101 So. 3d 339, 351-52 (Fla. 2012) (temporary-visa owners qualified by maintaining the permanent residence of dependent minor children). See Florida homestead for non-US citizens.
• Treaty relief: IRC §2102(b)(1) ("A credit of $13,000 shall be allowed against the tax imposed by section 2101", the $60,000 exemption equivalent) and §2102(b)(3)(A) ("To the extent required under any treaty obligation of the United States, the credit allowed under this subsection shall be equal to the amount which bears the same ratio to the applicable credit amount in effect under section 2010(c) for the calendar year which includes the date of death as the value of the part of the decedent's gross estate which at the time of his death is situated in the United States bears to the value of his entire gross estate wherever situated"). §2102(b)(2) is the separate rule for a decedent treated as a nonresident non-citizen under §2209, the greater of $13,000 or the same proportion of $46,800.
• Which treaties lift the credit: Instructions for Form 706-NA, stating that "[i]f the unified credit is affected by a treaty, see section 2102(b)(3)(A)" and that "[a]t the time this form went to print, treaties with Australia, Canada, Finland, France, Germany, Greece, Italy, Japan, and Switzerland contained provisions to which section 2102(b)(3)(A) applies." A treaty-based return position must be disclosed by attaching a statement saying so. The Canadian nonrefundable marital credit requires a statement referring to the treaty and showing the computation.
• The treaty list: Internal Revenue Service, Estate & gift tax treaties (international), listing Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Netherlands, South Africa, Switzerland and the United Kingdom, and noting that the Canadian estate tax provisions sit in Article XXIX B of the United States to Canada income tax treaty. Norway and Sweden do not appear; both treaties were terminated, so a list of seventeen countries is out of date. irs.gov (page last reviewed and retrieved 2026-09-08)

What Foreign Investors Ask Me About the $60,000

In 14 years of law practice, the people who reach me on this are almost never trying to avoid anything. They bought US shares from abroad because that is where the market is, and nobody at the brokerage mentioned what happens if they die holding them.

A common question I hear is, "Does the $60,000 apply to my whole portfolio or just the American part?" It applies to US-situs assets, and the exemption is small enough that a single account can clear it without the investor feeling wealthy in the slightest.

What I see go wrong is that families discover the exposure at the worst moment, when somebody has died and the brokerage will not release anything until it sees a transfer certificate. The account is frozen, the heirs are overseas, and the paperwork runs in a country none of them live in.

Practice pointer. Work out the situs of each holding before you need to, not after. Which assets count is a legal question with a clean answer, and knowing it in advance is what turns a frozen account into a planning decision.

Avoid assuming a treaty solves it. Treaties change the arithmetic where one applies, and many investors are in countries with no estate tax treaty with the United States at all.

Kevin D. Klagge, Esq., admitted in Florida since 2012. General information rather than advice on your situation.

The Estate That Was Only a Brokerage Account

A common question I hear is, "It is just an investment account, not property. Does that really count?" It counts, and I have come across a case where the account was the whole exposure.

A woman died at home in Italy. She was not a US citizen and had never lived here. Her entire worldwide estate came to about $165,000, of which roughly $124,640 sat in an investment advisory account at a New York bank. There was no house here, no business, no green card. The bank held the account, the account was US property for this purpose, and her estate ended up in the United States Tax Court arguing about the credit.

What that file shows is that the exposure is not a function of being rich. It is a function of where the assets are held, and a single brokerage account clears the exemption several times over without the family ever thinking of themselves as having a US estate.

Practice pointer. Check where each holding is legally located before adding to it. A US-listed fund is US property here even when it tracks a foreign index, and a non-US-domiciled fund holding the identical companies is not.

Avoid assuming a treaty solves this. Many countries have no US estate tax treaty at all, and where one exists it changes the arithmetic rather than removing the filing.

Kevin D. Klagge, Esq., admitted in Florida since 2012. Any case described is a decision of a court rather than a matter handled by this firm.

Updated on September 1, 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 and Florida law, not legal or tax advice, and does not create an attorney-client relationship. Non-resident estate tax, blocker structures, treaty positions, and Form 706-NA turn on your specific facts and on rules that change; for these we co-counsel an international tax advisor. Past results do not guarantee a similar outcome.