Sixty thousand dollars. That is the entire US federal estate-tax exemption available to a non-resident who dies owning American property — against the $15 million shield Congress made permanent for US citizens from 2026. No single number better captures the asymmetry a European buyer steps into when they fall for a beach house on Florida''s 30A or a lodge above Lake Tahoe. And yet tens of thousands of Europeans own American holiday homes happily and tax-efficiently, because the US system, for all its acronyms, is navigable once you know where the four tax moments actually sit: the day you buy, the years you hold, the day you sell, and the day your estate changes hands.
The question has become newly practical for our readers. The American side of the co-ownership portfolio has grown steadily — Kiawah Island, Lake Tahoe, and most recently a courtyard four-bed in Rosemary Beach, Florida — and European buyers weighing a US share against a Spanish or Italian one are right to ask how the tax treatment differs. A note before we begin: this article is general information, not tax advice. Cross-border taxation turns on your residence, your treaty position and your family circumstances, and the only universal rule is that a buyer of any US asset should spend an hour with a cross-border adviser before signing. What follows is the map that makes that hour productive.
At Purchase: The Tax That Isn''t There
European buyers are conditioned to brace for the purchase taxes. Spain''s transfer tax, Italy''s registration duties, France''s notarial costs — across most of Europe, the state takes a mid-to-high single-digit percentage of the price on day one, a burden we have examined in detail for Spain, France and Italy. The first American surprise is pleasant: there is no federal transfer tax on buying property in the United States. Closing costs exist — title insurance, recording fees, modest local transfer or documentary stamps that vary by state and county — but they are typically a fraction of the European drag. A buyer who has just been quoted the cost of completing on the Costa del Sol will find an American closing statement almost startlingly light.
There is a second structural point specific to co-ownership. The buyer of a share is not taking title to real estate directly; they are buying a membership interest in a single-purpose LLC that owns the home — the same architecture we unpacked in The LLC Advantage. The famous FIRPTA regime — the Foreign Investment in Real Property Tax Act, the acronym that haunts every article about foreigners and US property — is a seller-side mechanism. It obliges a buyer to withhold tax when the seller is a foreign person. Buying your share creates no FIRPTA liability for you; the regime only becomes your concern years later, on the way out. The mechanics of joining an LLC, from vetting to signing, are set out in our buying FAQs.
While You Own: Property Tax, Pooled Dues and the Quiet Years
The ongoing cost of American ownership is dominated not by income tax but by local property tax, which in resort markets commonly runs near or above one per cent of assessed value each year. In a co-ownership structure this is invisible in the best way: property tax, insurance, utilities and management are pooled into the annual dues and divided across the eight households, so each owner carries exactly their share of a bill that a sole owner would shoulder alone. Florida adds a quietly significant advantage for the internationally mobile: the state levies no state income tax and no state estate tax of its own, which is one reason the Gulf coast features so prominently in cross-border portfolios.
What about US income tax during the holding years? For most co-owners, the honest answer is: there usually isn''t any. The homes in our American collection are owner-occupied by design — they are not rented to paying guests — and a non-resident who simply uses a holiday home generates no US-source income to tax. The picture changes only where a property produces rental income, in which case a non-resident faces a default 30 per cent withholding on gross rents, almost always improved by electing under Section 871(d) to be taxed instead on net income at graduated rates, with expenses deductible. It is a well-worn path, but one that brings annual US filing obligations with it — a complexity the owner-only model simply never triggers.
When You Sell: FIRPTA, Section 1446(f) and the Withholding Maze
Exit is where the acronyms earn their keep, and where a non-resident seller must understand one distinction above all: withholding is not the tax. It is a deposit the US collects at closing because it cannot easily chase a seller abroad. The final bill is settled on a tax return, and overwithheld amounts come back as refunds.
For a direct sale of US real estate by a foreign person, FIRPTA generally requires the buyer to withhold 15 per cent of the gross sale price — reduced to 10 per cent for homes between $300,000 and $1 million that the buyer will use as a residence, and to zero below $300,000 under the same condition. Because a co-ownership exit is structured as the transfer of an LLC membership interest rather than a deed, the operative rule is usually the parallel regime of Section 1446(f), under which the buyer of a partnership interest from a foreign seller withholds 10 per cent of the amount realised, with the sums reported to the IRS within days of the transfer. Either way, the economic substance is the same: a slice of the proceeds is parked with the US Treasury until the seller files.
The actual tax, when the return is filed, is generally far gentler than the withholding suggests. A non-resident individual who has held the share for more than a year pays US federal capital-gains tax at long-term rates that top out at 20 per cent of the gain — the gain, not the price. A seller whose share has appreciated modestly will often find the 10 or 15 per cent of gross withheld at closing exceeds the final liability, sometimes substantially, and recovers the difference. The practical moral is unglamorous: keep records of what you paid, budget for the timing gap between closing and refund, and file. How resales work inside the co-ownership structure — including the right of the platform to assist in marketing the share — is covered in our how it works guide.
The Estate Question: $60,000 and a 40 Per Cent Rate
And so back to the number this article opened with. A non-resident, non-citizen who dies owning US-situs assets receives an exemption of just $60,000 — a figure fixed decades ago and never indexed — with the excess taxed at rates climbing to 40 per cent. US real estate is unambiguously US-situs. For the owner of a whole $4 million Florida house, the unplanned exposure is alarming; it is the single most common trap in cross-border property ownership, and the reason estate planners speak of American holiday homes in the tones other professionals reserve for uninsured yachts.
Three things soften the picture for a co-ownership buyer. First, scale: the exposure attaches to the value of what you own, and a share is by construction a fraction of a whole home — the difference between an estate problem and an estate footnote. Second, treaties: the United States maintains estate-tax treaties with a number of European countries that can raise the effective exemption dramatically or reallocate taxing rights, which is why the adviser conversation must be country-specific — a German, French or British owner may sit in a very different position from a neighbour two borders away. Third, structure: because the share is a membership interest in an LLC rather than a direct deed, its situs treatment for estate-tax purposes is a planning question in its own right — a genuinely unsettled corner of US tax law where professional advice is not optional but where planning opportunities exist that direct ownership forecloses. None of this removes the obligation to plan; all of it makes the plan shorter and cheaper than the whole-ownership equivalent.
What a Prudent Buyer Actually Does
Strip away the acronyms and the to-do list is brief. Before buying: confirm with a cross-border adviser how your home country taxes foreign property interests and whether an estate-tax treaty applies to you — the purchase itself triggers no US federal tax. While owning: pay the dues, enjoy the house, and note that an owner-occupied share typically creates no annual US filing burden at all. Before selling: anticipate the 10 per cent withholding as a cash-flow event, not a cost, and line up the return that recovers the difference. And at the estate-planning review you were due to have anyway: put the share on the table alongside everything else, because a one-eighth interest scaled to your actual use is far easier to plan around than a whole house ever was.
It is worth saying plainly: for many European families, the US share compares favourably with the European one on tax grounds. No purchase tax of consequence, no wealth tax of the kind Spain applies, no annual filings while you hold, a capital-gains regime capped at 20 per cent on the gain — the American system concentrates its menace into two well-marked moments, sale and succession, and both reward an hour of planning.
A Second Life, Sensibly Papered
The point of all this paperwork is what it protects: a second life lived on another continent — the courtyard pool before breakfast, the bike to the beach, the long American summer your children will remember as their own. Tax is not the obstacle to that life; unexamined tax is. A buyer who walks in knowing where the four moments sit owns their American share the way the system intends — quietly, predictably, and with the surprises confined to the good kind.
Browse the American portfolio on our USA collection page, or contact our team to talk through how a US share would fit your circumstances — we are happy to coordinate with your tax adviser from the first conversation.
