How Foreign Nationals may be able to Minimize the Estate Tax Burden

the us dollar bill with an eagle on it

The residential housing market has seen a spike in demand for homes from international homebuyers. Over the years, the United States has received billions of dollars from this unique segment of the market. With an advantageous exchange rate and low home prices, foreign buyers are acquiring more and more residential homes.

Lakeside Title would like to point out some things a realtor might share with foreign nationals clients.   Your foreign national clients could discuss the following ideas/facts with their CPA, tax advisor, or attorney that may help minimize their estate tax burden:


  • Non-resident aliens are subject to an estate tax on all of their US held property, which is typically 35% of the estates value.
  • US citizens and residents are treated differently than non-resident aliens in that they are taxed on their worldwide assets. As such, they are provided a $5 million exclusion from estate taxes.
    • Since non-resident aliens are only taxed on their US held property, their exclusion is substantially less- just $60,000.
    • However, non-residents are not taxed on gifts of intangible assets.
  • To minimize potential estate tax consequences, foreign nationals could opt to acquire property through a partnership.
  • Subsequently, one of the partners may be able to gift their partnership interest in that property to the other partner.
  • In doing so, a foreign national might be able to avoid estate taxes since the gifted partnership interest in that property is intangible and not subject to taxation.
  • Another option might be to acquire property through an irrevocable trust for the benefit of a third party.
  • When creating an irrevocable trust for the benefit of a third party (including the investor’s family members), it is possible that no gift tax liability arises upon the initial transfer of cash to the trust. Furthermore, since the U.S. real estate is owned by the trust upon the death of the investor, it is likely that no estate tax inclusion arises.

As a Realtor, you deserve a partner you can trust. If you choose, Lakeside Title as your preferred in-house title company, you can rest assured you will receive with the highest quality service and the latest information to help you more effectively assist your clients. Contact Lakeside Title today. We are compliant, friendly, flexible, and fast.

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