The exposure is far larger than most buyers expect. A non-resident, non-citizen owner of US real estate has a US estate-tax exemption of only USD 60,000 — against roughly USD 13–14 million for a US citizen or resident — with a progressive rate reaching 40%. Worse, the tax is charged on the GROSS value of the US property, not net of any mortgage, so leverage does not reduce it. Legal structuring routes do exist — a foreign 'blocker' corporation, or an irrevocable foreign trust — that can materially change the outcome, but they must be put in place before the purchase with specialist cross-border advice, not retrofitted afterwards. For French buyers there is also treaty relief (covered separately). Confirm your exposure and any structure with a US estate-tax attorney before you act.
The USD 60,000 exemption — and why the gross-value rule stings
Start with the single fact that reframes the whole purchase: the estate-tax exemption for a non-resident who is not a US citizen is USD 60,000. Not 6 million, not 600,000 — sixty thousand dollars. A US citizen or resident currently shelters something on the order of USD 13–14 million before federal estate tax applies. A foreign owner of the identical apartment shelters USD 60,000. Above that threshold, the estate faces a progressive federal estate tax that climbs to 40%. On a USD 5 million Miami condo held directly (or through a disregarded single-member LLC), the taxable base is effectively the whole value less USD 60,000 — an exposure that can run into the low millions.
Then add the rule that surprises even sophisticated buyers: the tax is assessed on the GROSS value of the US-situs property, not the net equity. If you bought a USD 5 million home with a USD 3 million mortgage, your economic stake is USD 2 million — but the estate-tax computation generally starts from the USD 5 million gross figure, not the USD 2 million you actually own. Debt does not straightforwardly shrink the base. This is the opposite of the intuition most buyers bring from their home country, and it is why 'I'll just leverage it' is not, by itself, an estate-tax answer. These figures and the gross-value treatment come from the IRS guidance for nonresidents not citizens and Form 706-NA. Our companion question explains why holding through a single-member LLC does nothing to change this result.
The legal routes to reduce it — and the one condition attached to all of them
The reassuring half of the answer is that this exposure is not a fixed law of nature — it is a function of how you hold the asset, and holding can be planned. Two families of structure do the heavy lifting. The first is a foreign 'blocker' corporation that owns the US real estate: because what you own at death is shares in a non-US company rather than a US-situs asset, the estate-tax situs can move offshore. The second is an irrevocable foreign trust established before purchase, which can hold the property outside your taxable estate. Both are legitimate, well-trodden routes; both carry income-tax, compliance and cost trade-offs that must be weighed for your specific case, because a structure that saves estate tax can create income tax if designed carelessly.
The one condition attached to every one of these routes is the same, and it is the reason this page exists: they must be set up before you buy. Estate-tax planning is architecture, not repair. Once a foreign individual holds US real estate directly, moving it into a blocker or trust after the fact can itself be a taxable event and is often impractical — so the elegant, low-cost options quietly disappear the moment you close on the property unplanned. French buyers have an additional layer of relief through the France–US estate-tax treaty's credit mechanism, which we cover in its own question, but treaty relief complements structuring rather than replacing the need to plan. The practical takeaway is unglamorous but decisive: bring a cross-border tax adviser and an estate-tax attorney into the process before the offer, not after the funeral. The thresholds, rates and gross-value rule here are from the IRS non-resident estate-tax guidance and Form 706-NA, and the treaty-country position from the IRS treaties list; everything here must be confirmed with a US tax adviser and estate/succession attorney for your specific situation before you act.
Sources
Primary and expert sources behind this answer:
- IRS — Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, estate of nonresident not a citizen (gross value of US-situs property, USD 60,000 exemption) ↗
- IRS — Estate Tax for Nonresidents Not Citizens of the United States (US-situs assets taxable; only a USD 60,000 exemption for non-residents vs ~USD 13–14m for US citizens/residents; rates up to 40%) ↗
- IRS — Estate & Gift Tax Treaties (International): countries, including France, with which the US has an estate-tax treaty ↗
This page is general information, not legal or tax advice. US estate, gift and income tax, state-level rules and foreign-ownership restrictions are technical, differ by state and change frequently. Every figure and structure here — especially anything touching estate tax and succession — must be confirmed with a US tax adviser and an estate/succession attorney (and, for French buyers, a French notaire) for your specific case before you act.
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