In order to transfer or sell U.S. real property owned by a deceased person, whether solely or jointly with another person, the estate or surviving joint owner, including a surviving spouse, must obtain a Tax Certificate from the Internal Revenue Service (IRS) and then record it with the registry of deeds in the county where the property is located or otherwise required by local law. You will NOT be able to sell the property without clearing title.
The Tax Certificate is just one requirement to clear title – other requirements may include recording the death certificate or affidavit of death and affidavit of no tax due or other state requirement, depending on whether or not the state has an estate tax separate from the federal U.S. estate tax.
Not only is the IRS Transfer Certificate necessary to clear title to real property, financial institutions usually require a Tax Certificate in order to transfer ownership of shares in U.S. corporations or financial accounts held by U.S. institutions, such as a simple bank account, Individual Retirement Account (IRA) or 401k.
The executor of your estate must have a U.S. estate tax return completed and filed in order to obtain the required Transfer Certificate. Filing a U.S. estate tax return is generally a lengthy process, as appraisals of any U.S. property are required, and other U.S. assets require documentation to support their reported values on the date of death.
As of December 2020, the processing time for a U.S. estate tax return for a non-resident (706-NA) exceeds one year. The sooner you begin the process, the better.
- Will my executor have to probate my estate in the U.S.?
- Are there ways for my estate avoid probate in the U.S.?
- How does the gift tax impact Canadians?
I will answer these and other cross border questions in the new year, so please check back often and if you have a specific situation that you want addressed, please do not hesitate to contact us through our Consultation Form. You can also visit us at www.ingenuitycounsel.com.
About Ingenuity Counsel & Michael Kennedy
Ingenuity Counsel, based in Windsor, Ontario, Canada, provides cross border tax & United States legal services to Canadians. Michael Kennedy, with close to 20 years of legal experience, and his team at Ingenuity Counsel, advise Canadians who own property in the United States, particularly Michigan, California & Florida, with respect to federal income & estate tax, estate planning & probate administration.
Mr. Kennedy is an attorney-at-law admitted in the States of California, Michigan & Florida. He is also authorized as a Foreign Legal Consultant by the Law Society of Ontario to provide legal services in Ontario respecting the laws of the United States. Mr. Kennedy provides legal advice only as it pertains to U.S. laws. Prior to establishing Ingenuity Counsel in 2012, he practiced law in the United States for more than 10 years in California, Michigan and Florida. Michael has a U.S. law degree (JD) from Western New England University School of Law and his Master of Laws degree (LLM) from Georgetown University Law Center in Washington DC.