ARTICLE · 03 JUNE 2016

Canadian Decedents With US Real Estate

Moodys Private Client Law LLP

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On July 31, 2015, the United States' Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 added new Code sections 1014(f) and 6035. On March 2, 2016, the IRS released related regulations.

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On July 31, 2015, the United States' Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 added new Code sections 1014(f) and 6035. On March 2, 2016, the IRS released related regulations. Under the new rules, the reporting of property values between estates and beneficiaries must be consistent, effective for US estate tax returns that are either required to be or are in fact filed after July 31, 2015.

If a US estate tax return was not filed as required, the new rules presume the inherited property's basis to be zero, even if no US estate tax is otherwise owed. The new rules highlight the importance of knowing when a Canadian resident (who is not a US person) is obliged to file a US estate tax return, and they are likely to be an unpleasant surprise to estate beneficiaries.

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