Estate Tax Planning for Non-Residents Owning U.S. Real Estate

Estate Tax Planning for Non-Residents Owning U.S. Real Estate IRC § 2101 imposes a tax on the transfer of the taxable estate of a person who was not a U.S. nonresident alien (NRA) at the time of death. The 2017 Tax Cuts and Jobs Act increased the basic exclusion amount for estates of U.S. residents and citizens, doubling it from $5.5 million to $11.2 million. However, the IRC sections relating to the taxation of estates of non-U.S. residents remained the same – the excluded amount remains at a paltry $60,000. A common situation is where a foreign investor has purchased U.S. real property and owns the property directly. Upon death, the value of that real property would be included in the estate and subject to tax on its gross estate exceeding $60,000. While there are planning opportunities for NRAs to purchase U.S. real estate to avoid estate tax (such as owning U.S. real estate through a foreign corporation), opportunities are limited when an NRA already…

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