Own US Stocks or a US Condo? The IRS May Tax Your Estate — Starting at Just US$60,000
Here is a number that surprises almost every Canadian who hears it: die owning more than US$60,000 of certain US assets, and your estate may have to file a US estate tax return — even if you lived your whole life in Canada, never held a green card, and never filed a US tax return in your life.
Canada has no estate tax of its own. The United States does, and its net reaches across the border.
Who This Actually Applies To
US estate tax works on a concept called domicile — where you live with no definite intention of leaving. That is not the same test as residence for income tax, and the IRS manual is explicit that the two definitions differ.
If you die as a US citizen or a US domiciliary, the US taxes your worldwide estate. If you die as neither — the situation for most Canadians — the US taxes only the assets it considers located in the United States. Tax people call these US-situs assets.
What Counts as a US Asset
Under the IRS's own situs rules:
- US real estate — a condo in Florida, a house in Arizona — is US-situs property.
- Stock of US corporations is US-situs property. Yes, that includes the US shares and US-listed holdings sitting in your Canadian brokerage account.
- Tangible property physically in the US on the date of death counts too.
- Not everything counts: the IRS notes that certain bank deposits and certain debt obligations are not treated as located in the United States.
Your RRSP, TFSA and house in Canada are not automatically US property. The issue is the slice of your wealth the US claims as its own.
The US$60,000 Line, and the Tiny Credit Behind It
The IRS manual states the filing rule plainly: the executor of a nonresident, non-citizen decedent files Form 706-NA to report US-located property worth more than US$60,000.
Without a treaty, the only unified credit available to an estate filing Form 706-NA is US$13,000. Compare that with US citizens and domiciliaries: for deaths in 2026, the IRS Form 706 instructions put their basic exclusion at US$15,000,000. A Canadian gets a credit measured in thousands; an American gets an exclusion measured in millions.
Above that small shelter, the tax is graduated on the same rate schedule used for US estates, climbing to a top rate of 40% on the portion above US$1,000,000. Estate tax returns are due within 9 months of the date of death.
The Treaty Rescue: Canada's Pro Rata Credit
This is where the Canada–US tax treaty earns its keep. Article XXIX B of the treaty — the "Taxes Imposed by Reason of Death" article — gives the estate of a Canadian resident a pro rata unified credit.
In plain terms, the formula works like this:
- Take the exclusion amount available to a US citizen — US$15,000,000 for 2026 deaths.
- Multiply it by a fraction: the value of the decedent's US assets divided by the value of their worldwide assets.
- The result is the shelter the estate can use against its US assets.
The estate claims it by attaching a statement invoking the treaty and showing the calculation to Form 706-NA. The treaty also carries a small-estate exemption for Canadian residents whose worldwide gross estate does not exceed US$1.2 million, which applies to US securities and certain other US property.
Two Examples, in Plain Dollars
- US$50,000 of US stocks, nothing else in the US: US assets do not exceed US$60,000, so there is no Form 706-NA filing requirement at all. The threshold is the whole story.
- A US$500,000 US condo, worldwide estate of US$2,000,000: the estate must file Form 706-NA, because US$500,000 is well over US$60,000. But run the treaty math: US$500,000 ÷ US$2,000,000 is 25%, and 25% of the US$15,000,000 citizen exclusion is US$3,750,000 of pro rata shelter — far more than the US$500,000 of US assets. In simple terms, the treaty credit can wipe out the US tax. Without the treaty, that same condo would face the graduated US rates with only the US$13,000 credit against them. Filing is still required either way — the treaty changes the tax, not the paperwork.
The Twikup Take
The US$60,000 threshold is not a typo, and it has caught out Canadian snowbirds and US-stock investors for years. The real planning point is simple: the more of your wealth sits in US assets relative to your worldwide estate, the less the treaty fraction shelters you. Anyone holding six figures of US property should have this conversation with a cross-border tax professional while it is still cheap to have.
This article is general information only, not tax advice. Cross-border estate rules are fact-specific — confirm your situation with the IRS sources above or a qualified cross-border tax professional.
Image: AI-generated illustration.