U.S. Estate Tax for Non-Resident Owners of American Homes and Stocks: What Foreign Families Need to Know

The short answer: The federal estate tax treats U.S. citizens and domiciliaries one way and nonresident aliens (NRAs) another. In 2026, citizens and domiciliaries each have a $15 million exemption. A nonresident alien, by contrast, gets only a $13,000 unified credit against U.S.-situs assets such as American real estate and stock in U.S. companies. That credit shelters roughly the first $60,000 of the taxable estate; above that, rates climb on a graduated scale to a top rate of 40%. Families who live in mainland China or elsewhere abroad but own a California home or U.S. stocks should look at this exposure early.

Key figures at a glance (all checked against official sources)

Sources for these figures are listed under "Main sources" at the end.

Who counts as a nonresident alien? It's domicile, not a green card

For estate tax purposes, the test isn't your visa type or whether you hold a green card. It's your domicile at death. The IRS, in the Form 706-NA instructions, defines it as living somewhere, even briefly, with no definite present intention of leaving (Regulations §20.0-1). The answer depends on all the facts: how long you lived there, where your family is, where you own property and work, and where your social ties are.

No single factor settles it. How long someone has lived in the U.S., where their family lives, where most of their assets sit, and which place they treat as home all get weighed together. Because it's a holistic test, two green card holders can end up with different answers, and that is the starting point for much of the planning discussed below.

• Green card holders who live in the U.S. long-term are usually treated as U.S. domiciliaries and get the $15 million exemption.
• People who live in mainland China, Taiwan, Hong Kong, or another country and simply own a U.S. home or U.S. stocks are usually treated as nonresident aliens.
• People who split time between countries, who hold a green card but mostly live abroad, or who live in the U.S. on a nonimmigrant visa such as an H-1B, F-1, or E-2 are the hardest cases and need individual analysis.

Note that "resident" for estate tax is not the same as "resident" for income tax. You can be a U.S. income tax resident and still not be domiciled here for estate tax purposes, and vice versa.

What counts as a U.S.-situs asset?

According to the IRS, a nonresident alien's U.S. estate tax reaches only assets located in the United States. These generally include:

• Real estate in the U.S., including homes, rental properties, and land;
• Tangible personal property in the U.S., such as cars, furniture, and artwork (some artwork has special rules);
• Stock in U.S. corporations, even if the certificates are held abroad or the shares are registered in a nominee's name. U.S. stocks held through a brokerage, along with U.S. ETFs and mutual funds, often come into play.

Assets that generally don't count as U.S.-situs include deposits in U.S. banks that aren't connected with a U.S. trade or business, certain qualifying bonds, and life insurance proceeds paid on the decedent's death. The rules for each asset type are detailed, and whether they apply depends on the law in effect that year and the specific structure.

A common mistake is focusing only on the house and forgetting what accounts are out there. Shares in a brokerage account, small positions bought years ago, and funds purchased through an app can all fall within U.S.-situs assets. Start by listing every account.

Domiciliaries vs. nonresidents: how big is the gap?

Notes on sources: the $15 million figure comes from the IRS Estate Tax page (as adjusted by the 2025 federal tax law, the One Big Beautiful Bill Act). The $60,000 filing threshold for nonresidents comes from the IRS page and the Form 706-NA instructions (September 2025 revision), and the $13,000 unified credit from Part II, line 7 of those instructions and IRC §2102(b)(1). The nonresident credit did not rise along with the domiciliary exemption.

What might estate tax look like on $2.5 million of U.S. assets? (illustration)

Here is a hypothetical, simplified example meant only to show scale, not a tax calculation. Suppose a parent living abroad owns a California home worth $2 million at death plus $0.5 million in U.S. stocks, both U.S.-situs. That's $2.5 million in U.S. assets. Assuming no debt deductions and applying the graduated rate table in IRC §2001(c), the tentative tax is $945,800 ($345,800 plus 40% of the amount over $1 million). After the $13,000 unified credit, that comes to about $933,000. If the same property belonged to a U.S. domiciliary, it would fall within the $15 million exemption and owe no federal estate tax.

Real numbers depend on any mortgage on the home (nonresidents' debt deductions are subject to proration limits), how the assets are held, and whether a treaty applies. Treat the example as a warning, not an estimate; the actual tax turns heavily on status, treaties, and debt deductions.

Depending on how status is determined, the same family's federal estate tax can go from zero to six figures. So the first step in planning usually isn't figuring out how to save tax. It's pinning down status and which assets are in scope. An attorney and an accountant should run the actual numbers.

Can an estate tax treaty help?

The IRS notes that estate tax treaties between the U.S. and certain countries may offer better treatment than the general rules, such as a larger credit or limits on which assets count as U.S.-situs. Whether a treaty exists, and what it says, depends on the decedent's citizenship or country of residence. The Form 706-NA instructions list the current estate tax treaty countries as Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, South Africa, Switzerland, and the United Kingdom. Mainland China isn't on the list, meaning there is no estate tax treaty in force between the U.S. and mainland China.

Even where a treaty exists, it doesn't apply automatically. It often depends on whether its terms cover the type of asset involved and how the return is filed. "Is there a treaty?" and "Can we actually use it?" are two separate questions, and both need checking.

Common situations in Chinese families (anonymized and generalized)

These are generalized, anonymized scenarios for illustration only. They don't describe any particular client and don't represent the outcome of any case.

• Parents in China buy a California home for a child studying or working in the U.S., with title in the parents' names. When a parent dies, the home is part of that parent's U.S.-situs estate and may trigger Form 706-NA. Titling the home in the child's name raises a different set of issues: whether it's a gift, and whether the source of funds is clear.
• A student or work-visa holder buys a home and holds U.S. stocks here while family stays in China. The question is whether this person is already treated as a U.S. domiciliary.
• Assuming a living trust avoids estate tax. A revocable living trust usually doesn't change the estate tax calculation; assets in the trust are still treated as part of the grantor's estate. A trust addresses probate and privacy, not estate tax.
• Holding U.S. real estate through a foreign company. Some people consider holding U.S. assets through a foreign corporation so the shares aren't U.S.-situs. That structure raises income tax, property tax, reporting compliance, and foreign corporate tax issues at the same time. It isn't simple, and it isn't right for every family.

Common planning approaches (general overview)

1. Confirm status first. Are you a U.S. domiciliary or a nonresident? That decides which set of rules applies.
2. Inventory U.S.-situs assets. List each property, stock, fund, and account, and whose name it's in.
3. Consider how assets are held. Options include changing the form of ownership, using a treaty, or life insurance. Each has costs and limits and should be weighed against your family's situation.
4. Be careful with gifts. Nonresident aliens pay gift tax on gifts of U.S. real estate and other tangible property. Gifts of intangibles such as stock are generally outside the gift tax, but there are exceptions. Talk to an advisor before giving.
5. When a spouse isn't a U.S. citizen. The marital deduction is restricted and may call for a special trust (a QDOT). The rules for two U.S.-citizen spouses don't carry over.
6. Don't forget probate. Even with no estate tax due, a nonresident who owns California real estate will still need a California court proceeding after death, known as ancillary probate. A California living trust can often take care of that.

When is Form 706-NA due, and what happens if it's late?

Where filing is required, the executor files Form 706-NA. It's required when the value of U.S.-situs assets at death (plus the decedent's lifetime taxable gifts) exceeds $60,000. The deadline is 9 months after death; if more time is needed, Form 4768 provides an automatic 6-month extension (Form 706-NA instructions, September 2025 revision). Even if no tax is ultimately owed, a return is required once the threshold is crossed. Late filing brings penalties and interest unless reasonable cause can be shown (IRC §6651; Penalties section of the Form 706-NA instructions).

For families, the harder part is often discovering the filing requirement only after a death. The executor has to gather valuations for homes and accounts, and a parent's account information may be spread across institutions or even countries. Leaving family members an organized list of assets and contacts ahead of time cuts down on the scramble later.

Frequently asked questions

1. I have a green card but live in China most of the year. Do I get the $15 million exemption?

Not necessarily. The test is domicile at death (living in the U.S. with no definite intention of leaving). A green card is just one factor; what matters is how you actually live.

For example, someone who holds a green card but works and lives abroad long-term, with family overseas and only occasional trips back, may or may not still be treated as a U.S. domiciliary. Conversely, someone on a nonimmigrant visa who has lived in the U.S. for years and intends to stay may be treated as domiciled here. There's no one-size answer.

2. Are a nonresident's U.S. bank deposits subject to estate tax?

According to the IRS, qualifying U.S. bank deposits (not connected with a U.S. trade or business) generally aren't U.S.-situs assets. Whether a given account qualifies depends on its nature.

3. Does putting my home in a living trust avoid estate tax?

No. A living trust can avoid probate, but the home is still included in the grantor's estate.

4. Are U.S. stocks and ETFs subject to estate tax?

Stock in U.S. corporations held by a nonresident is a U.S.-situs asset. ETFs and mutual funds depend on how they're organized and should be checked individually.

5. Does California have a state estate tax?

No. This article covers the federal estate tax.

Main sources

• IRS: Some nonresidents with U.S. assets must file estate tax returns (accessed October 1, 2026)
• IRS: Estate tax for nonresidents not citizens of the United States
• IRS: Gift tax for nonresidents not citizens of the United States
• IRS: Instructions for Form 706-NA (September 2025 revision; filing threshold, deadline, extension, unified credit, penalties, and treaty country list)
• IRS: Form 4768 (extension request)
• IRS: Estate Tax ($15 million exemption for 2026, under the 2025 federal tax law, the One Big Beautiful Bill Act)
• 26 U.S.C. §2001(c) (graduated rate table, top rate 40%)
• 26 U.S.C. §2102(b) (nonresident unified credit of $13,000)

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