Does a US LLC protect a foreign buyer from US estate tax?

Why the single-member LLC does not do what buyers think

The reasoning almost every foreign buyer hears goes like this: 'buy the house through a US LLC and you're protected'. That advice is half-right, and the half it gets wrong is the expensive half. An LLC is excellent at what it is designed for — it separates your personal wealth from claims arising out of the property (a tenant injury, a contractor dispute) and it keeps your name off the public deed. Those are real benefits and, for a luxury purchase, often worth having. But liability protection and estate-tax protection are two completely different questions, and the LLC only answers the first.

The reason is a specific IRS rule. A US LLC owned by one person is, by default, a 'disregarded entity' for federal tax: the IRS looks straight through it and treats the owner as holding the underlying asset directly. So when a foreign owner of a single-member LLC dies, the IRS does not see 'a foreign person who owned a foreign-looking company'; it sees a foreign person who owned US real estate. The membership interest in the LLC is itself characterised as a US-situs asset. That drops it squarely into the non-resident estate-tax net — a tax reaching up to 40% on value above an exemption of just USD 60,000 (see our companion question on the estate-tax threshold and how the numbers actually work). In other words, the LLC that felt like protection is, for estate-tax purposes, transparent.

This is why 'I bought through an LLC' is one of the most dangerous false comforts in US property. The liability box is ticked; the tax box the heirs care about is not. The single-member-LLC treatment is set out by the IRS itself, and the non-resident estate-tax exposure by the IRS's guidance for nonresidents not citizens and Form 706-NA. For a deeper, Miami-specific walk-through of process, LLC use, FIRPTA and Florida property tax, our dedicated Miami buyer's-agent page is the guide to read alongside this one.

What actually moves the tax situs — and why timing is everything

If a single-member LLC does not shield the estate, what does? The structure that can genuinely change the answer is a foreign 'blocker' — typically a non-US corporation (sometimes topped by a trust) that owns the US real estate, so that what the foreign individual holds at death is shares in a foreign company rather than a US-situs asset. Shares in a foreign corporation are generally not US-situs property, so this can move the estate-tax exposure offshore. It is a recognised planning route, but it is not free of consequences: a corporate holding structure carries its own income-tax, compliance and running costs, and the wrong design can trade an estate-tax problem for an income-tax one. It has to be modelled for your specific situation, not copied from a template.

The decisive point is timing. These structures work when they are in place before you acquire the property. Unwinding a US-held asset into a blocker after the fact can trigger tax on the way in and is often impractical, which is exactly why the 'buy now, structure later' instinct is so costly — by the time an adviser is looking at it, the cheap options have usually closed. Anti-inversion and related IRS rules also constrain what can be done retroactively. So the honest sequence is: decide the ownership structure with a cross-border tax adviser first, then buy — not the reverse. None of this should discourage the purchase; a US trophy home can be held very sensibly. It simply means the estate-tax question belongs at the start of the process, beside the choice of city and the financing, not at the end. The situs and structuring principles here are drawn from the IRS single-member-LLC guidance, the IRS estate-tax rules for non-residents and Form 706-NA; confirm your specific structure with a US tax adviser and an estate/succession attorney before acting.