Non U.S. Citizen + Buy property = 40% taxed upon death?

Non U.S. Citizen + Buy property = 40% taxed upon death?

Member since 2018 · 3 posts · 0 votes

I am wondering if there is anyone else noticed about this issue, if you are a non U.S. Citizen you don't get 5 million  U.S. dollar tax exemption and it doesn't seem likely possible  to have an workaround for this (e.g. living trust)

My dad, who is age 65, doesn't speak English ,invested about 7 million U.S dollar worth of property  in commercial and residential property(houses, stores, offices) , from his personal fund a few years ago, investment are doing fine  ,however,   recently  I discover that there  is no way for him to leave his asset to me after he passed away without an heavy tax because he is Chinese national, I asked with my dad's   accountant ,property manager, and Everwill , they have no clue how to solve this problem and Everwill told me the living trust will not able to help on estate tax if he is not a U.S. Citizen.

before I tell my dad he have to sell the property and move his money outside of U.S. I still feel I am missing something, because if this is the case, no one will invest in this country,  so I asked my question in  here.

Any suggestion is appreciated!

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  • Lance LvovskyPro Member
    Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
    8y

    There are ways around this. Two common techniques I have incorporated with clients is to use a double corporation strategy or the utilization of a discretionary irrevocable trust. Estate planning for nonresident aliens is imperative, given the total value of your father's estate (amount of $60,000) will be subject to the 40% U.S. Estate Taxes.

    With the proper structuring, your dad can ensure his real estate passes to you with minimal tax impact.

  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    8y

    @Gui Qiu, 

     You will definitely need an experienced professional to set this up.

    1) Property owned via foreign Corp : 

    2) Property owned via foreign Corp via US corp: 

    Both of this will avoid estate and gift tax.  But there are other complications as 1) have to pay brach tax but not 2. Same with Dividend withholding.

    Please talk to a professional. 

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