Posted by With the rise of the global life concept of "migrate without immigration", the number of Chinese residents buying investment houses or holiday homes in the United States is increasing.This group will regularly or irregularly go to the United States for business, tourism, family visits and other activities. Owning American real estate also provides the convenience of a globalized lifestyle.However, as a foreigner, is there any risk in buying a house in the United States?in the text,insurGuru™️Insurance CollegeIt will discuss the "non-resident aliens", what are the risks of buying a house in the United States, and how to protect the interests of the family in the long-term.The word "we" used in this article refers to the group of "non-resident foreigners".
Inheritance tax risks faced by Chinese residents who buy a house in the United States
if weBought a house in the U.S.——We may buy a house with a tourist visa, or buy a house with other visa status——As long as we have not sworn into a U.S. citizenship and become a citizen of the United States, then when we pass away unfortunately, our house will return To be levied the US federal estate tax.
According to U.S. federal law,Foreign citizens who live permanently outside the United States need to pay inheritance taxes on real estate in the United States(Depending on how the real estate ownership is held).
If our family is required to pay inheritance tax, but within 9 months after our death, there is not enough cash to pay the tax, then the house will be forced to sell in exchange for the necessary liquidity to pay the tax bill funds.
In other words, without a cash to pay the estate tax immediately, our family members cannot get the full value of our house, but only a part of it.
*The 2018 Tax Cuts and Employment Act has hardly helped foreigners' inheritance tax issues.
Ways to own U.S. housing property rights and inheritance tax rates
If we are personallyHouse bought, Then we need to pay inheritance tax.The house will be valued according to the fair market value on the day of death, and inheritance tax will be levied.The maximum tax exemption amount we have is only $6.This is usually only a small part of the market value of a house that can easily reach millions.
The inheritance tax will be levied on the value of more than $6, and the current tax rate is as high as 40% (unless this part of the property can be taxed or exempted).
If both spouses are foreign residents (such as Chinese citizen couples, but temporarily residing in the United States), there is a limit on the amount of estate tax exemption transfer between the two after the death.Any property estate tax payable must be paid within 9 months after the death of one party.If the surviving spouse is unable to pay the tax, he may be forced to sell his assets to obtain the cash needed to pay the tax.
If we are buying in the name of a U.S. company or enterpriseHouse bought, We also need to pay US estate taxes.As a company’s asset, the house will be subject to inheritance tax based on its fair market value on the day of death, combined with the company’s shareholders’ equity.
The effect of estate inheritance tax on family members
We use a case to illustrate: Mr. Zhang and Ms. Huang are husband and wife, and both are residents and citizens of China.Mr. Zhang likes California’s climate and environment very much, so his family decided toIrvineThey bought a house for them to live in during their annual vacation in the United States. The value of the house was $80.
If Mr. Zhang died unexpectedly in a traffic accident, according to the non-resident alien inheritance tax regulations, Ms. Huang may have to pay inheritance tax on the US assets of this holiday home in Irvine that exceeds the $6 exemption limit.
Therefore, Ms. Huang needs to prepare about 30 US dollars in cash to pay taxes in order to avoid the risk of forced sale of the house.
However, it is not an easy task to spend $30 in cash at a time.
Life insurance is the most common solution
We work hard all our lives to create well-being for our families.But when we are no longer able to accompany each other, how can we leave the wealth to our family in the most complete way?
One of the simplest solutions is life insurance.
First, life insurance is a U.S. asset that is not subject to inheritance tax and gift tax; second, there islife insurance, We can:
- Get immediate cash payment for U.S. estate taxes
- Help us leave the house to the family
- Help ensure that families can fully obtain the overall value of our heritage
- And enjoy the deferred increase in U.S. income tax on the cash value of the policy
So, when you and your spouse are not U.S. citizens, but they haveReal estateAt times, life insurance solutions may help provide death claims and tax benefits, and help you and your spouse avoid such risks in advance.
