$60,000, against
nearly $14 million
A US citizen's estate is exempt into the millions. A non-resident's exemption on US assets is sixty thousand dollars, and the rate above it reaches 40%.
Before you read on
- General information, not tax or legal advice. Estate tax planning must be done by a qualified US adviser, and ideally alongside an adviser in your own country.
- Thresholds and rates change with legislation. Confirm the current figures before acting.
Step 1The gap that surprises people
It is the largest single difference in US tax treatment between a citizen and a foreign owner, and it is fixed at purchase rather than at death.
| US citizen or domiciliary | Non-resident, non-domiciled | |
|---|---|---|
| Exemption | Roughly $14 million per person (2026) | $60,000 of US-situs assets |
| Top rate | 40% | 40% |
| Applies to | Worldwide assets | US-situs assets only |
| Marital deduction to a spouse | Unlimited to a citizen spouse | Not automatic; a qualified domestic trust is needed |
| Return | Form 706 | Form 706-NA |
| Due | 9 months from death, extendable by 6 | Same |
Some countries have an estate or gift tax treaty with the US that changes the exemption available. Japan, the UK, Germany and France are among them; many countries are not. Check whether one applies to you before assuming the $60,000 figure.
The arithmetic is blunt. A $2,000,000 New York apartment held personally by a non-resident with no applicable treaty leaves roughly $1,940,000 exposed, and tax at the top of the scale approaches $750,000. It is payable in cash within nine months, which in practice means the property is sold in a hurry.
Step 2What counts as a US asset
US real estate, whether held directly or through a partnership in many cases; shares in US corporations, wherever the certificate sits; tangible property physically in the US; and debt obligations of US persons in certain cases.
Deposits in US bank accounts not connected with a US trade or business; most US corporate and government bonds under the portfolio interest rules; life insurance proceeds on the life of a non-resident; and shares in a non-US corporation.
Shares in US companies held in a foreign brokerage account are still US-situs assets. Investors who carefully structured the property and left a US equity portfolio in their own name have solved half the problem.
A non-recourse mortgage secured on the property reduces the value in the estate proportionately. A recourse loan gives only a partial deduction. Which one you signed matters here, years later.
Step 3The structures used, and what each one does
| Structure | Estate tax | Income tax | Cost and complexity |
|---|---|---|---|
| Personal name | Fully exposed above $60,000 | Simplest; individual rates and full deductions | None |
| US LLC, single member | Generally disregarded, so still exposed | Same as personal | Low |
| Foreign corporation holding the property | Shares are not US-situs, so outside the estate | Corporate rates, no long-term capital gains rate, branch profits tax possible | Moderate to high |
| Foreign corporation owning a US LLC | Same shielding, cleaner liability position | As above | Moderate to high |
| Irrevocable trust | Can remove the asset from the estate | Depends heavily on the terms | High, and hard to unwind |
| Life insurance to fund the liability | Does not remove the exposure; pays the bill | Proceeds on a non-resident's life are generally not US-situs | Premium cost |
There is no structure that is best in every case. A corporate holding removes the estate exposure and gives up the preferential long-term capital gains rate, which can cost more on a sale than it saves on death. The right answer depends on the size, the holding period and your own country's treatment of the same entity.
Step 4Timing, and why this is a purchase-stage decision
Every effective structure has to be in place before or at purchase. Moving a property already held personally into a company or a trust afterwards is a taxable transfer, with transfer taxes, potential gain recognition and often a mortgage that must be refinanced. The cost of doing it later is many times the cost of doing it at the outset.
| When | What is possible | Cost |
|---|---|---|
| Before contract | Any structure, cleanly | Advice fees, formation costs |
| Between contract and closing | Usually still possible with the attorney's help | Modest, if the contract permits assignment |
| After closing | Transfer to an entity | Transfer taxes, possible gain, lender consent |
| After death | Nothing | The return is due in nine months |
Estate tax turns on domicile rather than immigration status alone, and a permanent resident is usually treated as domiciled. It is fact-specific and needs advice.
If your country has an estate tax treaty with the US it may raise the exemption or change which country taxes what. Japan, the UK, Germany, France and a number of others have one. Ask an adviser to read the specific treaty.
Not by itself. A single-member LLC is generally disregarded for federal tax, so the underlying property remains a US asset in the estate. It is a liability tool, not an estate tax tool.
For non-citizen spouses, joint ownership does not produce the unlimited marital deduction a citizen spouse receives, and the survivor may have to prove their contribution to the purchase. It is a common misunderstanding.
Advice and formation typically run from a few thousand dollars for a simple arrangement to considerably more for a corporate or trust structure, with annual filing costs on top. Weigh it against a potential 40% charge.
Let’s talk first
Tell us the budget and how you intend to hold the property, and we will introduce advisers who structure this before the contract rather than after.
RELATED GUIDES
Recent transactions
A sample of the sales, purchases and rentals we acted on in 2025 and 2026.
Real estate brokerage services are provided through R New York.
Important notice
The figures on this page are general information as of August 2026 and do not represent an offer, a quote, or a guarantee of any transaction terms. Reinvent NY does not provide legal, tax, or investment advice. Confirm anything material with an attorney and a CPA before you act on it. Nothing here is a solicitation to invest, and no return is promised. Real estate brokerage services are provided through R New York.