Florida is full of homes and condos owned by people who live somewhere else — Canadians, Europeans, and Latin American families who bought a place in the sun. Most of them have no idea that the way the property is titled could hand the U.S. government 40% of its value when they die. This is the single most important — and most overlooked — issue in cross-border ownership of Florida real estate.
The $60,000 Trap
U.S. citizens and residents enjoy a very large federal estate-tax exemption — roughly $13.99 million per person in 2025. A non-resident, non-citizen (a "non-resident alien," or NRA) gets nothing close to that. For U.S.-situs assets, an NRA's exemption is effectively just $60,000, delivered through a $13,000 unified credit. Everything above $60,000 in U.S.-situs assets is taxed at graduated rates rising to 40%.
What Counts as "U.S.-Situs"?
U.S. estate tax for an NRA applies only to U.S.-situs assets. Knowing what is and isn't U.S.-situs is the foundation of every plan:
| Asset | U.S.-situs for estate tax? |
|---|---|
| U.S. real estate held directly (e.g., a Florida condo) | Yes — always |
| Shares of a U.S. corporation | Yes — even if held in a foreign account |
| Tangible personal property located in the U.S. | Yes |
| U.S. bank deposits (personal, non-business) | Generally No (statutory exception) |
| Certain "portfolio" debt obligations | Generally No |
| Shares of a foreign corporation (even holding U.S. real estate) | No |
That last line is the key to most planning: if the foreign owner holds shares of a foreign company that in turn owns the Florida real estate, what they own at death is a non-U.S. asset — and it falls outside the U.S. estate-tax net.
The Gift-Tax Side (Don't Just Give It Away)
You can't simply gift the property to your children to solve the problem. NRAs are subject to U.S. gift tax on gifts of U.S. real property and tangible U.S. property, and — unlike citizens — they have no large lifetime gift exemption, only the annual exclusion. A lifetime transfer of Florida real estate by an NRA can itself be a taxable gift. Structure, not gifting, is the answer.
The Non-Citizen Spouse Problem (QDOT)
Married couples normally rely on the unlimited marital deduction — one spouse can leave everything to the other with no estate tax. That deduction is generally not available when the surviving spouse is not a U.S. citizen. To defer the tax, the assets must pass into a Qualified Domestic Trust (QDOT), which has a U.S. trustee and strict rules. Mixed-nationality couples who skip this can face an estate-tax bill on the first death that a same-asset citizen couple would never see.
Treaties Can Change Everything
The United States has estate- and gift-tax treaties with roughly a dozen-and-a-half countries — including Canada (via the income-tax treaty), the United Kingdom, Germany, France, and others. These treaties can override the default situs rules or, in several cases, give an NRA a prorated share of the full U.S. exemption based on the percentage of their worldwide estate located in the U.S. For a resident of a treaty country, the planning can look completely different — and far more favorable — than the $60,000 default. Identifying whether a treaty applies is always step one.
The Main Structures (and Their Trade-Offs)
Foreign corporation (a "blocker")
Holding the Florida property through a foreign corporation removes it from the U.S. estate (the owner holds foreign shares). The cost: corporate-level income tax on rental income and sale, FIRPTA still applies when the corporation sells, no step-up in basis at death, and ongoing compliance. Best for pure investment property, not a personal residence.
Foreign trust / two-tier structures
An irrevocable foreign trust — often owning a foreign corporation that owns the U.S. real estate — can address both estate tax and succession, while keeping the property out of probate. Complex, but powerful for larger holdings and multi-generational families.
Life insurance and treaty planning
For some owners, the cleanest answer is to keep things simple and fund the eventual estate-tax liability with life insurance (foreign-owned life insurance proceeds are generally not U.S.-situs), or to rely on a favorable treaty rather than a costly structure.
Don't Forget Florida Probate
Even setting tax aside, Florida real estate owned in an individual's name forces a Florida probate at death — a second proceeding on top of any in the home country. A revocable trust or proper structure avoids it. See our guide to Florida ancillary probate for non-residents.
Frequently Asked Questions
Related Reading
- Foreign-Investor Holding Structures for Florida Real Estate — name vs. LLC vs. corporation vs. trust.
- Florida Ancillary Probate for Non-Residents — avoiding a second probate.
- FIRPTA Withholding in Florida — the tax that hits on sale.
Protect Your Florida Property Across Borders
Truestead Law builds cross-border estate plans for foreign owners and mixed-nationality families — coordinating Florida title, holding structures, QDOTs, treaty positions, and your tax advisor so a single condo doesn't become a 40% estate-tax problem.
International & Cross-Border Practice →This article is for general informational purposes and does not constitute legal or tax advice. U.S. estate- and gift-tax outcomes are highly fact-specific, depend on residency, domicile, and applicable treaties, and the figures cited change annually. Consult a licensed Florida attorney and a qualified cross-border tax professional regarding your situation. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.