The $60,000 trap most nonresidents miss
A US citizen or resident can pass roughly $15 million (2026) free of US estate tax. A nonresident alien gets only $60,000 of exemption against their US-situated assets β and that figure has barely moved in decades.
So a foreign investor who buys a $1.5M US apartment and dies could face US estate tax on roughly $1.44M of value, at rates climbing to 40% β a bill of several hundred thousand dollars, payable before the heirs can take the property. Most never see it coming because they assume the generous citizen exemption applies to them.
US real estate is the classic trap because it is always US-situs. Holding it directly, in your own name, maximizes the exposure.
Gift tax vs estate tax β the situs twist
This is the single most useful thing to understand as an NRA:
- US real estate β caught by BOTH gift and estate tax.
- US corporation stock β exempt from NRA gift tax, but SUBJECT to estate tax. So gifting US shares during life can avoid the tax that would hit at death.
- US bank deposits β generally outside estate tax for NRAs (special rule).
Because of this asymmetry, lifetime gifting of US intangibles (like shares) is a common planning move β while real estate usually needs a holding structure instead. There's no NRA lifetime exemption, so only the annual exclusion ($19,000; $194,000 to a non-citizen spouse) shelters gifts.
Planning levers (with a professional)
NRAs with US assets commonly reduce exposure by:
- Foreign holding company β owning US real estate through a non-US corporation can convert US-situs real estate into non-situs foreign stock for estate-tax purposes (with income-tax trade-offs).
- Life insurance β proceeds on an NRA's life are generally not US-situs, providing liquidity to pay any tax.
- QDOT β a Qualified Domestic Trust can defer estate tax on assets passing to a non-citizen spouse.
- Treaty relief β if your country has a US estate-tax treaty, the exemption can be far higher than $60,000.
Each carries trade-offs across income tax, control and reporting. This tool only sizes the exposure β the structuring needs a cross-border specialist.
Frequently asked questions
Q. Does my heir pay US tax on receiving the gift/inheritance?
A. No β US transfer tax falls on the donor/estate, not the recipient. (A US-person recipient may have a Form 3520 reporting duty for large foreign gifts, but not tax.)
Q. I rent out a US property β same rules?
A. Rental income is a separate income-tax matter (often with FIRPTA on sale). The estate/gift exposure here is about transferring the asset itself.
Q. What if the US and my country have a treaty?
A. Estate-tax treaties (the US has them with a limited set of countries) can replace the $60,000 exemption with a pro-rated share of the much larger exemption, or change situs rules. Always check your specific treaty.
Sources: IRC Β§2101β2107 (NRA estate tax), Β§2501 (gift tax), Β§2511; IRS Form 706-NA and Form 709-NA; 2026 figures β NRA estate exemption $60,000 (fixed), annual gift exclusion $19,000, non-citizen-spouse exclusion $194,000; rates 18β40%. This is an independent self-assessment tool, not tax or legal advice; US-situs determination, treaties and structuring are highly fact-specific. Consult a licensed cross-border estate-tax attorney. See also our exit tax, SPT and green card travel tools.