Hello XXXXXXX,
As a nonresident alien, if at the time of your death you own property in the United States, you would owe estate taxes on any value of your US properties which exceed $60,000. The first $60,000 in total value is exempt from estate taxes.
So whatever the fair market value is of both condos at the time of your death, less the $60,000 exemption, is what would be taxable at the following rates:
FOR A TAXABLE ESTATE
THE FEDERAL ESTATE TAX
From
To
Is
of Amount Over
$0
$10,000
18%
10,001
20,000
1,800 + 20%
10,000
20,001
40,000
3,800 + 22%
40,001
60,000
8,200 + 24%
60,001
80,000
13,000 + 26%
80,001
100,000
18,200 + 28%
100,001
150,000
23,800 + 30%
150,001
250,000
38,800 + 32%
250,001
500,000
70,800 + 34%
500,001
750,000
155,800 + 37%
750,001
1,000,000
248,300 + 39%
1,000,001
1,250,000
345,800 + 41%
1,250,001
1,500,000
448,300 + 43%
1,500,001
2,000,000
555,800 + 45%
2,000,001
& Up
780,800 + 48%
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Thank you XXXXXXX
If the condo is morgaged, will the taxable amont for Estate Taxe be the net (after deducting morgage) market value of the condo?
Isn't there also Capital gains Taxe on presumption of disposition at time of death of the owner?
If the spouce legallly inherits, are capital gains taxe differed to the time she would dispose or die?
The estate tax is based on the fair market value of the condo, regardless of how much is owed on the mortgage. You are not allowed to deduct the current loan amount any only pay tax on the difference.
There is no capital gains tax on presumption of disposition of assets. That is a Canadian law which we do not have here in the US. If your wife or someone else inherits the condos, they will pay estate tax at the time of your death. If they later sell the condo they will then be liable for capital gains tax at that time on any gain they had from the sale. Their gain would be figured by taking the selling price of the condo less the basis (or your cost). But that tax is separate from estate taxes and will not apply until such time as the property is actually sold. Currently the long term capital gains tax rate is 15% however there are plans to raise that rate to 20% in the near future.
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad
Thank you very much. You have been very clear. I will register your name for future reference.
Ray.
Thank you Ray