US Estate Tax Exposure for Foreign Owners of US Real Estate

Purchasing property in Miami is a legal process you can complete from abroad. What happens to that property when you die is a different calculation—and the gap between a US citizen's estate tax treatment and a non-resident alien's is large enough to erase a meaningful share of your estate's value if you hold real estate in your own name without any planning.

Published October 12, 2026

Who this applies to

The US federal estate tax uses domicile—not citizenship, not visa status, not years spent in the country—to draw the line. A non-resident alien (NRA) for estate tax purposes is someone whose permanent home was outside the United States at the time of death. In practice, most non-citizen buyers of Miami condos qualify: they live in Canada, Brazil, Venezuela, Colombia, France, or elsewhere, and they purchased a Miami property for investment or occasional use.

If that describes your situation, the US estate tax rules apply to every US-situs asset you own at the moment of death, regardless of which country you call home.

What counts as a US-situs asset

The IRS defines "US-situs property" broadly. For most foreign buyers, the relevant categories are:

Real property located in the United States

Every condo, house, or commercial property you own in Florida—or any other state—is a US-situs asset, whether held directly in your name or through a single-member LLC that is treated as a disregarded entity for US tax purposes.

Tangible personal property physically located in the US

Furnishings, vehicles, artwork, and jewelry stored inside or connected to a US property may also be taxable situs assets.

Stock in US corporations

Shares of a US-incorporated company held directly are US-situs even if you purchased them abroad. Note that certain categories—US government bonds, bank deposits in certain forms—are excluded by statute.

The $60,000 exemption and the 40% rate

US citizens and domiciliaries benefit from a large unified credit that effectively shelters several million dollars from estate tax. Non-resident aliens receive a $60,000 exemption—a figure that has not been adjusted for inflation since it was set by statute. The two thresholds are not even in the same order of magnitude.

Above the exemption, the federal estate tax rate reaches 40%. On a $1.5 million Miami condo with no other planning in place, the rough arithmetic looks like this:

Gross US-situs estate

$1,500,000

NRA exemption

−$60,000

Taxable amount

$1,440,000

Estimated federal estate tax (graduated rates, top rate 40%)

approximately $564,000

The actual calculation is more nuanced—deductions exist for debts secured by the US property, administration expenses, and charitable bequests—but the illustration shows how quickly the liability grows on a property that seemed like a straightforward purchase.

The form your executor files is IRS Form 706-NA (United States Estate Tax Return for Estates of Nonresident Aliens Not Citizens of the United States). It is due nine months after the date of death. A six-month extension may be requested, but interest accrues from the original due date.

Estate tax is not the same as FIRPTA

A common point of confusion: FIRPTA withholding is an income tax mechanism that applies when a foreign person sells US real estate. The buyer's closing agent withholds 15% of the gross sales price and remits it to the IRS as a prepayment against any capital gains tax owed by the foreign seller.

Estate tax applies at death, not at sale. The two taxes operate independently. A foreign person who inherits US property and later sells it may face both: estate tax on the date-of-death value, and FIRPTA withholding (potentially reduced by a stepped-up basis) when the heir eventually sells.

Tax treaties can change the picture

The United States has estate and gift tax treaties with a limited number of countries—including Australia, Canada, France, Germany, Ireland, Italy, Japan, the Netherlands, South Africa, Sweden, Switzerland, and the United Kingdom, among others. These treaties may increase the effective exemption, reduce the applicable rate, provide credits for taxes paid to the other country, or offer other relief.

Treaty benefits are not automatic. The estate's executor must actively claim them, and the specific provisions vary significantly from one treaty to the next. The IRS publishes a list of applicable estate tax treaties, but the analysis of whether and how a treaty applies to a specific estate requires legal judgment. An attorney who handles cross-border estate matters should assess this before you structure your purchase—not after.

Common planning approaches

Foreign buyers frequently ask about ways to reduce US estate tax exposure on their Miami property. Several structures come up regularly in practice:

Foreign corporation ownership

Holding US real estate through a non-US (foreign) corporation can remove the real property from a US-situs estate, because the taxable asset would then be foreign corporate stock—not US real property. However, this structure introduces other costs: higher FIRPTA withholding rates (21% rather than 15%) on future sales, potential branch profits tax on rental income, and additional annual reporting obligations. It is not a universal solution and requires analysis of all applicable taxes together.

Life insurance structured to cover the liability

Some foreign owners acquire a US life insurance policy held in an irrevocable trust specifically to provide liquidity to pay the estate tax bill when it comes due. The death benefit passes income-tax-free and, if structured correctly, may not itself constitute a US-situs asset. This approach requires coordination between an estate planning attorney and a licensed insurance professional.

Domestic LLC vs. personal-name ownership

A Florida single-member LLC does not, by itself, remove US estate tax exposure for a foreign owner—the LLC is transparent for US tax purposes if treated as a disregarded entity. There are other legitimate reasons a domestic LLC may be appropriate, including liability protection and privacy, but the estate tax question requires a separate layer of planning beyond the entity choice.

Non-citizen spouses and the marital deduction

Married US citizens can generally pass assets to each other at death free of estate tax through the unlimited marital deduction. That deduction does not apply when the surviving spouse is a non-US citizen—even a lawful permanent resident. Instead, assets pass through a Qualified Domestic Trust (QDOT) to defer (not eliminate) the estate tax. The QDOT must be established before the estate tax return is filed and must have at least one US trustee. Distributions of principal from a QDOT during the surviving spouse's lifetime are subject to estate tax at that point.

Portability of the deceased spouse's unused exemption—a mechanism that allows a surviving US citizen spouse to use the decedent's remaining exemption—is not available to non-resident alien estates. The $60,000 exemption is a fixed amount; it does not carry over.

What to do before you close

The estate tax conversation is not one to have after a deal closes. Structuring decisions made at the time of purchase—how the property is titled, whether and what type of entity is used, and how the deed is worded—determine which planning options remain open. Unwinding a personal-name purchase after the fact is possible but involves additional transaction costs, transfer taxes, and potential tax consequences.

Any foreign buyer should consult with a US attorney who handles international estate and tax matters before closing, and should revisit the structure periodically as personal circumstances or applicable law change.

Questions people actually ask

Does Florida have its own estate tax on top of the federal tax?

No. Florida does not impose a state-level estate or inheritance tax. The exposure for foreign owners of Miami real estate is entirely at the federal level.

Is the $60,000 exemption per property or per estate?

Per estate. The $60,000 shelters the total value of all US-situs assets combined—not each property separately. If you own two Miami condos worth $700,000 each, the $60,000 exemption applies once against the combined $1.4 million value.

What happens if the estate tax bill is not paid?

The IRS holds a lien on US real property for unpaid federal estate tax. In practice, US real estate typically cannot be transferred or sold without resolving that lien first. An executor cannot distribute the property—or the proceeds from its sale—before the estate tax liability is settled.

Can gifting the property during my lifetime avoid the estate tax?

Gifts of US real estate by a non-resident alien are subject to US gift tax if the property is US-situs at the time of the gift. The annual exclusion is limited, and gifts above the threshold trigger a return and potential tax at rates similar to the estate tax. Lifetime transfers are generally not a simple workaround without separate planning.

Stefania Riverin, Licensed Real Estate Sales Associate · FL SL3620067 · Brokered by NB Elite Realty · 1101 Brickell Ave, Miami, FL 33131 · Equal Housing Opportunity. This post is general information about US estate tax concepts as they relate to foreign ownership of real property, and is not legal or tax advice. Consult a qualified US attorney and CPA before making any structuring decisions.