Generosity,
taxed at the border
Non-residents gifting US real estate face US gift tax with only a small annual exclusion — no million-dollar exemption. The order of operations decides whether a family transfer is cheap or catastrophic.
Before you read on
- General information as of August 2026. Cross-border gift taxation depends on both countries and any treaty — take advice before transferring anything.
- Not tax or legal advice.
- The basis consequences in Section 3 surprise even well-advised families.
Point 1The non-resident gift tax problem
US citizens enjoy a unified gift and estate exemption in the millions. Non-resident aliens gifting US-situs real estate get almost none of it: gifts of US real property above the small annual exclusion (about $19,000 per recipient) incur US gift tax at rates up to 40% — and the lifetime exemption available to citizens does not apply.
The asymmetry catches families mid-plan: a parent who could have structured ownership before buying instead decides, years later, to 'put the apartment in the children's names' — and manufactures a taxable gift of the entire value. The time to plan family ownership is before closing, not after.
Point 2What is and is not US-situs for gifts
The gift tax on non-residents reaches US-situs tangible property — real estate above all. Intangibles are generally outside it: gifting shares of a corporation (even one holding US property) is typically not a taxable US gift, which is why entity structures dominate cross-border planning. Cash in a US account occupies an awkward middle — gifts of physical dollars or US-account transfers can be caught.
This creates the standard sequencing: fund the purchase abroad, gift abroad, or hold through the right entity from day one — rather than gifting the deed itself later. Each route has its own costs; all beat a 40% tax on a Manhattan apartment's full value.
Point 3The basis trap: gifts vs inheritance
The step-up makes inheritance tax-efficient on the capital-gains axis exactly where lifetime gifting is inefficient — but non-resident estates face their own 40% tax above roughly $60,000 of US-situs value. The planning question is never 'gift or bequeath' in isolation; it is which combination of entity, insurance, debt, and timing leaves the least combined tax across both countries.
| Route | Recipient's basis | Consequence |
|---|---|---|
| Lifetime gift | Donor's original basis carries over | Built-in gain transfers with the deed |
| Inheritance | Stepped up to date-of-death value | Appreciation to that date escapes capital gains |
| Sale to family at market | Fresh basis at price paid | Gain realized now; FIRPTA applies |
| Trust structures | Depends entirely on design | Get the design before the deed moves |
US rules; the family's home country may tax the same transfer on its own logic. Both systems apply at once.
Point 4Structures families actually use
The recurring toolkit: foreign corporations or corporate blockers (estate and gift insulation at the price of corporate tax character), irrevocable trusts settled before purchase (control and succession without the deed ever moving), qualifying non-recourse debt (shrinking the taxable US estate), and life insurance sized to the exposure (funding the tax rather than avoiding it).
Which fits depends on the family's countries, treaty access, horizons, and appetite for complexity. The constant: every good structure was cheap at purchase and expensive to retrofit. If a transfer is even conceivable within the family's decade, the adviser conversation belongs before the contract.
Legally yes, tax-wise dangerously: adding a name gifts a share of the property, taxable above the small annual exclusion with no lifetime exemption for non-residents. Price the tax before touching the deed.
Roughly $19,000 per recipient per year (2026 figure) for US-situs property, plus an unlimited marital amount only to US-citizen spouses (a larger annual amount applies to non-citizen spouses). No million-dollar lifetime shield exists for non-residents.
Gifts of intangibles by non-residents are generally outside US gift tax — the core reason entity structures dominate. The entity must be real and respected; get advice on both countries' views.
Inherited property takes a stepped-up basis at death, erasing built-in capital gains; gifted property carries the donor's old basis. Against that, non-resident estates face estate tax above ~$60,000 — the comparison needs both taxes.
US gift tax falls on the donor. Recipients may face home-country tax on receipt — Japan, for instance, taxes gift recipients — so cross-border gifts need advice on both ends.
Cash gifted abroad, before it touches US accounts, generally avoids US gift tax and lets the child buy directly. Documentation matters for source-of-funds review; sequence it with advisers.
RELATED GUIDES
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Planning a family transfer? We will map the US and home-country consequences with your advisers before anything moves.
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.