U.S. Estate Tax for Nonresidents: The $60,000 Threshold and What Counts as a U.S. Asset

A person who has never lived in the United States can still owe U.S. estate tax. The tax reaches what a nonresident owned here at death, and the threshold for it is low: an estate whose U.S. assets are worth more than $60,000 has to file a U.S. estate tax return. For a foreign owner with a Florida condominium, a U.S. brokerage account or shares in a U.S. company, this dossier sets out which assets count, how the threshold works, where treaties change the answer, and what the family faces after a death.

Who these rules apply to: domicile, not the day count

Income tax residency and estate tax residency are different tests. For income tax, a foreign national becomes a U.S. resident by holding a green card or by meeting the substantial presence test, which counts days. For estate tax, the question is domicile: where the person had made their permanent home, with the intention of staying, at the time of death. The IRS points to the estate tax regulations for this rule in its questions on estate tax for nonresidents.

The two answers do not have to match. Someone who spends long winters in Florida can be a U.S. resident for income tax and still be domiciled abroad for estate tax. This dossier is about the person the IRS calls a nonresident not a citizen: neither a U.S. citizen nor domiciled in the United States. A U.S. citizen is taxed on worldwide assets wherever they live, and that is a different subject.

What counts as a U.S. asset at death

The estate of a nonresident who is not a citizen is taxed only on assets situated in the United States. The statute lists what is treated as situated here (Internal Revenue Code section 2104) and what is treated as situated outside it (section 2105). The IRS summarises the main categories on its page on nonresidents who must file estate tax returns.

Asset held at death	Generally a U.S. asset for estate tax?
Real estate located in the United States	Yes.
Cars, boats, jewellery, cash and other physical property located in the United States	Yes, with a narrow exception for certain works of art on loan for exhibition.
Shares in a U.S. corporation	Yes, even if the certificates are kept abroad or held through a nominee.
Shares in a fund organised in the United States	Generally yes, because the fund is usually a U.S. corporation for tax purposes.
A U.S. bank account not used in a U.S. business	Generally no.
Bonds and loans whose interest qualifies as portfolio interest	Generally no.
Life insurance paid on the death of the nonresident	No.
Shares in a corporation organised outside the United States	Generally no, even where that corporation owns U.S. assets.

The third row is the one that catches investors. A person who would never think of themselves as owning U.S. property often holds U.S. listed shares or U.S. funds in a brokerage account, and that account is a U.S. asset for estate tax purposes. Where a brokerage account sits does not settle the question; what the account holds does.

Each asset is valued at its fair market value on the date of death, not at what was paid for it. A property bought many years ago is counted at today's value.

The $60,000 threshold and the rate above it

The executor of a nonresident's estate must file Form 706-NA if the value of the decedent's U.S. assets at death, together with certain lifetime gifts of U.S. property, exceeds $60,000. The IRS states on its page on estate tax for nonresidents that this figure is not indexed for inflation. It has stayed the same while property and share prices have risen.

Above the threshold, the estate is taxed on the same graduated rate schedule that applies to U.S. estates (section 2101), with a top rate of 40 percent. Deductions exist for items such as funeral and administration expenses, debts and mortgages, but a nonresident's estate generally has to show its worldwide assets to claim them, because many deductions are allowed only in proportion to the share of the estate located in the United States.

The contrast with a U.S. citizen or domiciliary is large. For 2026, the exclusion available to a U.S. estate is $15,000,000 (Rev. Proc. 2025-32). A nonresident does not have that exclusion, and the executor cannot carry an unused amount over to a surviving spouse, an election the IRS confirms is unavailable to a nonresident's estate.

Where gift tax and estate tax point in opposite directions

The U.S. gift tax rules for a nonresident who is not a citizen reach only real estate and physical property located in the United States. Shares, including shares in U.S. companies, are generally outside the gift tax for such a giver. The estate tax rules reach those same shares. An asset that can generally be given away during life without U.S. gift tax can therefore be taxed if it is still owned at death.

That asymmetry is covered in more detail in our dossier on holiday gifts and U.S. gift tax for nonresidents. The point to carry from it is that the two taxes have to be planned together. A lifetime transfer of shares can take value out of the U.S. estate; a lifetime transfer of a Florida house is itself within the gift tax.

Timing and control also matter. Assets transferred in a way that leaves the person with the use of the property or the income from it, or that leaves them able to change who benefits, can be pulled back into the estate at death. A transfer is only effective for estate tax if it is a real transfer.

Holding through a company does not always change the answer

Many foreign buyers hold U.S. property through a U.S. limited liability company, often on the assumption that this removes the property from their estate. For a single member LLC that is disregarded for tax purposes, the IRS generally looks through the company to the property it holds, and the exposure remains. Our dossier on how foreign buyers hold U.S. real estate compares the structures in detail.

A U.S. corporation does not solve the problem either, because its shares are themselves a U.S. asset. Shares in a foreign corporation generally are not, which is why a foreign holding company is the traditional answer to estate tax on U.S. assets. That structure has income tax costs of its own, and it only works if the company is respected as a real company: it needs to be run as one, with its own accounts, its own decisions and no personal use of its property by the owner without proper terms. Our dossiers on the U.S. blocker corporation and on corporate formalities that hold up cover those conditions.

Interests in partnerships, and in LLCs taxed as partnerships, are an area without a settled rule on where the interest is located for estate tax. Anyone relying on a partnership structure to keep U.S. assets out of a nonresident estate should treat that position as unresolved.

Treaties: fifteen countries, and the ones that are not on the list

An estate tax treaty can change the outcome substantially, for example by narrowing which assets count as U.S. assets or by allowing a share of the much larger exclusion available to U.S. estates in proportion to how much of the worldwide estate is in the United States. The IRS lists the countries with an estate or gift tax treaty on its estate and gift tax treaties page: Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland and the United Kingdom. For Canada, the estate provisions sit inside the income tax treaty rather than in a separate estate tax treaty.

India, Mexico, Brazil, the United Arab Emirates and Nigeria are not on that list. An owner domiciled in one of those countries is generally left with the $60,000 threshold and no treaty relief. Our guide to the India and United States treaty and the other country guides on this site cover the income tax side of the same relationship.

Where a treaty applies, it does not apply by itself. The executor claims it on Form 706-NA and attaches a treaty disclosure, as the IRS explains in its estate tax questions. The disclosure mechanics are set out in our dossier on treaty based return positions.

What the family faces after a death

Form 706-NA is due nine months after the date of death. An extension of time to file of up to six months can be requested on Form 4768, but the tax itself is still due on the original date, and interest runs on anything paid late.

The practical problem is often access rather than tax. U.S. banks, brokers and transfer agents commonly will not release a nonresident decedent's assets to the heirs until the IRS has issued a transfer certificate confirming that any estate tax has been paid or provided for. The IRS sets out the process on its page on transfer certificates for nonresident estates. Where no return was required, the executor submits the will, the death certificate and a sworn list of U.S. assets, and the IRS states that processing takes 12 to 18 months from receipt of everything it needs.

The IRS can also collect unpaid estate tax from the people who received the property. An heir who takes assets from an estate that never filed can inherit the liability along with them.

If the estate sells U.S. real estate, the buyer generally withholds part of the sale price under the FIRPTA rules, and the estate files an income tax return to settle the actual tax. Inherited property generally takes its value at the date of death as its cost for income tax, so a prompt sale often produces little gain. The withholding mechanics are covered in our dossier on FIRPTA withholding when you sell.

A surviving spouse who is not a U.S. citizen

Between U.S. citizen spouses, property can pass at death without estate tax under the marital deduction. A nonresident's estate can claim the deduction for property passing to a spouse who is a U.S. citizen. Where the surviving spouse is not a U.S. citizen, the deduction is generally available only if the property passes into a qualified domestic trust that meets the requirements of section 2056(d). That trust defers the tax rather than removing it, and it has its own trustee and reporting requirements. A trust of this kind is a legal document, and drafting it belongs with the family's attorney.

Questions to settle while the owner can still answer them

1. List every asset in the United States and its current value: real estate, physical property kept here, U.S. shares and funds, loans to U.S. persons and any interest in a U.S. business.
2. Confirm the owner's domicile, and whether a U.S. citizen or green card holder is involved anywhere in the family.
3. Check whether the country of domicile has an estate or gift tax treaty with the United States, and if it does, what it changes.
4. Look at how each asset is held. A disregarded LLC and a U.S. corporation generally leave the exposure where it was; a foreign company may not, if it is run as a real company.
5. Write down where the documents are, who the executor will be, and which U.S. institutions hold assets, so the transfer certificate process can start without delay.
6. Where the spouse is not a U.S. citizen, raise the marital deduction question with the family's attorney before it is needed.

Most of these questions are cheap to answer during life and expensive to answer afterwards, when the people who know the facts may no longer be available. The structure intake form is the route in if you want your U.S. holdings reviewed against these rules.

This dossier describes the general mechanics of U.S. estate tax for nonresidents who are not U.S. citizens. It is not tax or legal advice, it does not address any particular estate or structure, and it makes no representation about the treatment of any specific arrangement. Figures, treaty positions and IRS procedures change; confirm them at the time you rely on them, and take advice on your own facts.