The U.S. imposes a federal tax on the taxable estate of a decedent who was not a U.S. citizen or domiciliary for transfers of U.S. real property upon death. In 2010, there was no U.S. estate tax and as of January 1, 2011 the U.S. estate tax was to have been reinstated in accordance with the 2001 situation; an estate tax rate of 55% and an exemption of $1 million U.S.
However, as a result of negotiations to preserve tax cuts, an amendment was agreed to for the U.S. estate tax to impose a rate of 35% on estates larger than 5 million dollars U.S. for an individual and 10 million dollars U.S. for couples for the next two years. For U.S. non-residents, the exemption is pro-rated based on the value of their U.S. property over their world-wide estate value.
For Canadian residents who had concerns over the U.S. estate tax, this amendment is welcome news. Essentially individual Canadians who own U.S. real property and have worldwide assets with a value of less than 5 million dollars U.S. no longer need to be concerned about U.S. estate taxes.