The US estate tax for foreign owners of real estate starts at a $60,000 exemption — a fraction of the multimillion-dollar shield US persons receive — so a single Florida rental can leave your heirs a serious tax bill. FIRPTA gets the attention because it hits at sale. Estate tax hides until the worst possible moment, and it is far cheaper to plan for at purchase than to repair afterward. This article is general information, not tax advice; we coordinate with cross-border CPAs — and estate attorneys — on every file.
The $60,000 problem
US persons can currently pass a multimillion-dollar estate before federal estate tax applies. A nonresident owner’s exemption on US assets is just $60,000, with rates that climb to 40 percent, per the IRS rules for nonresident estates. Held in your own name, a $500,000 condo could expose most of its value. For many investors, estate tax for foreign owners is the largest US tax number in the entire file — larger than FIRPTA.
What estate tax for foreign owners reaches
The tax applies to “US-situs” assets, and US real estate is the classic example. A single-member US LLC does not change that: the IRS disregards it and looks through to you — the same look-through we covered in our ownership structure guide. After a death, the estate files Form 706-NA, and heirs generally need IRS clearance before a title company will insure a sale. That clearance can take many months, leaving a frozen property on top of a tax bill.
Debt and structure change the math
Financing helps more than most owners expect. Nonrecourse debt reduces the property’s taxable value dollar for dollar, while ordinary recourse loans count only proportionally — so how your loan is written matters, and it is worth asking before you sign. Foreign-corporation structures can move US property outside the estate net entirely, but they usually raise income taxes at the exit. That trade-off is why the estate conversation and the FIRPTA conversation belong in the same meeting.
Planning levers investors actually use
None of these are do-it-yourself moves, but all four belong on the agenda with your advisors:
- Pick the structure before the deed: restructuring after closing can trigger transfer taxes, lender consent issues, and taxes of its own.
- Keep sensible leverage in place: a mortgage can shrink the exposed value while the loan is outstanding.
- Price term life insurance: proceeds on a nonresident’s life are generally not US-situs, so a policy can fund the tax and prevent a forced sale.
- Check for a treaty: a short list of countries has US estate tax treaties; most of Latin America does not.
A typical deal
A 58-year-old investor from Córdoba buys a $450,000 Fort Lauderdale duplex. Before closing, her cross-border CPA and a Florida estate attorney compare holding options; she settles on a Florida LLC with a foreign national DSCR loan at 70 percent LTV — $3,800 in rent against a $3,100 full payment. The team models her exposure with the loan in place, and she adds a term policy sized so her two children could pay any estate tax without a rushed sale. The planning costs a few thousand dollars; the problem it prevents runs to six figures.
Buying with the whole picture in mind?
Alpha Equity Lending finances foreign investors across Florida and coordinates with the cross-border CPAs and estate attorneys who handle the tax side, so the loan and the plan land together. Tell us about your purchase through our submit your deal page — in English or Spanish.
By Andres Jara — Alpha Equity Lending (NMLS #1855083). 20+ years in real estate finance, an MS in Finance, and an active South Florida investor and landlord.
