One Potential Strategy Foreigner Investors Can Utilize to Transfer U.S. Real Property out of their Estate to Avoid the Estate and Gift Tax
By Anthony Diosdi Individuals that are not domiciled in the United States are subject to an estate and gift tax on the transfers of real property physically located in the United States. U.S. estate and gift taxes are charged at high effective rates (up to 40%) in the case of nonresident aliens, because the unified credit provides an exemption amount equivalent to just $60,000, an amount that has not increased in decades. See IRC Section 2101. For U.S. federal estate and gift tax purposes, the term “residency” means “domicile.” While the U.S. federal income tax concept of residency relates only to physical presence in a place for more than a transitory period of time, domicile relates to a permanent place of abode. For U.S. federal estate tax purposes a person…