In the series of articles “Inheriting and inheriting in Florida” we introduce the topic, point out risks and present possible solutions. The series consists of the following contributions:
- Applicable inheritance law in Florida
- Testament in Florida
- Trusts in Florida
- Compulsory portion of property in Florida
- Inheritance tax and US estate tax on Florida residents
- Estate handling in Florida
In this fifth part of the series, we explain questions about inheritance tax and US estate tax.
Is there an estate tax or inheritance tax in Florida?
The US state of Florida does not have its own estate tax or inheritance tax.
Is there any US estate tax on property or Florida residence?
The US levies a US Federal Estate Tax nationwide. US estate tax may therefore also apply to references to Florida. However, high tax exemptions are currently granted so that often no tax is payable.
What is the tax exemption if the testator was a US citizen or was domiciled in the US?
In this case, the worldwide estate is subject to US estate tax. However, the general tax exemption is currently very high (by 2025: $ 10 million + inflation adjustment). In addition, the transfer to the spouse is tax-free if the spouse is American.
What is the tax exemption if the testator was not a US citizen and did not have a US domicile?
In this case, only his US assets are subject to US estate tax, e.g. B. Land, shares in a US corporation. However, the exemption for the estate of such a person is only $ 60,000.
Is it true that the tax exemption for Germans on US inheritance tax with assets in Florida is only $ 60,000?
As stated above, the estate of a person without US citizenship and without domicile in the USA is only granted a reduced exemption of $ 60,000 according to internal US tax law. If the German-American double taxation agreement is applicable, the high tax allowance for the estate of a US person is granted proportionally in relation to world wealth to US wealth.
Is there US estate tax on the transfer of property upon death to the spouse?
The transfer to the spouse, who is an American, is tax-free. The tax exemption for the transition to the spouse who is not US-American is granted an exemption in the amount of the general exemption under certain conditions within the scope of the double taxation agreement (i.e. subject to a change in law by 2025: $ 10 million + inflation adjustment). In addition, in the case group at issue here, the value of the US property that is passed on to the spouse is only subject to 50% of the US estate tax.
Does every German who has a green card have to pay US estate tax on their global wealth?
Many residents of Germany with assets in Florida have a US permanent residence permit (e.g. green card, EB-5 visa). In such a case, many US tax advisors and US attorneys assume that the worldwide estate is subject to US estate tax. Within the scope of the double taxation agreement, the USA can in principle only tax the worldwide estate of a person if this person had his tax domicile in the USA within the meaning of Art. 4 DBA USA inheritance. This is often not the case for people who also had a place of residence and permanent residence in Germany, even if they have a US permanent residence permit. But even if a person who is German and not US-American moves permanently to the USA, they will be treated for the purposes of US estate tax for 10 years from the establishment of a domicile in the USA as if they only had their tax residence had in Germany (but according to popular opinion this should only apply to the testator).
Does Germany also tax real estate in the USA?
The worldwide accumulation of assets is subject to German inheritance tax if the testator is a resident at the time of his death or (!) The purchaser at the time the tax is incurred. In particular, a resident is any natural person who has a domicile in Germany within the meaning of § 8 AO or who has had it in the last 5 years – or 10 years within the scope of the US double taxation agreement (for the purchaser, however, the 10-year period should Not apply). In both cases, Germany also has a right to tax under the double taxation agreement.
Can the US estate tax, which is levied on the estate of a German with assets in Florida, be offset against German inheritance tax?
Yes, if the USA taxes the US estate based on the location, the US estate tax levied in this way can be offset against the German inheritance tax.
In addition, I refer to the article Inheritance Tax and Estate Tax in the USA – FAQ
More detailed information on the subject can be found on our website www.wf-frank.com or in the Florida country report commented on by us at the Ferid / Firsching / Dörner / Hausmann plant.