Question 1

What is US Estate Tax for Canadian residents owning US real estate or stocks?

Accepted Answer

Under 26 U.S.C. 2101, non-resident aliens (including Canadian citizens living in Canada) are subject to US estate tax (up to 40%) on US-situs assets (US real estate, US corporate stock, tangible personal property) if the total US-situs assets exceed $60,000 USD.

Question 2

How does Article XXIX B of the US-Canada Tax Treaty reduce US estate tax?

Accepted Answer

Article XXIX B of the US-Canada Tax Treaty grants Canadian residents a prorated unified credit based on the ratio of US-situs assets to worldwide assets. If your worldwide estate is below $13.61 million USD (2026 threshold), US estate tax is generally eliminated.

Question 3

Does Canada have an estate tax or inheritance tax?

Accepted Answer

Canada does NOT have an estate tax or inheritance tax. Instead, Canada imposes a deemed disposition capital gains tax at death on capital assets under Subsection 70(5) of the Canadian Income Tax Act.

Statutory Citation	Legal Subject	Operational Mechanism
26 U.S.C. § 2101	US Non-Resident Estate Tax	Imposes 18% to 40% estate tax rates on US-situs assets over $60k.
DTAA Article XXIX B	Prorated Unified Credit Relief	Prorates $13.6M US exemption based on US-situs to worldwide asset ratio.
CRA ITA § 70(5)	Deemed Disposition at Death	Taxes capital assets in Canada at death (no separate estate tax).

US-Canada Cross-Border Estate Tax

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Statutory Regulations

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