Gifting a $5M NYC property as a nonresident? Expect a $1.9M tax bill

Full transcript

0:10 Hello, I’m Max Dilendorf, a New York attorney and real estate advisor.

0:14 In today’s video, I want to address a question I often receive from international clients: What are the U.S. tax consequences if a nonresident wants to gift property located in New York to a nonresident relative? Let’s walk through a common scenario.

0:34 It’s 2025. You’re a non-U.S. resident who purchased a condo in New York City several years ago, and the property is now worth $5 million. You want to transfer the property as a gift to your son or sister, who also reside outside the United States.

0:54 While this may seem like a simple act of generosity, the U.S. tax implications can be both significant and costly — if not properly planned. Under U.S. tax law, nonresidents are subject to gift tax on transfers of U.S.-situs property. That includes real estate located in the United States. Unfortunately, nonresidents are not entitled to the same lifetime gift tax exemption that U.S. citizens and residents enjoy — which is approximately $14 million in 2025. Instead, nonresidents are limited to an Annual Exclusion of $19,000 per Recipient. That means the entire $4,981,000 value of the gifted property becomes taxable. The U.S. federal gift tax is progressive and reaches as high as 40%. Specifically, for a gift of this size, you would owe approximately $345,800 on the first $1 million of taxable value, and 40% on the remaining $3,981,000 — which comes out to almost $1.6M. Altogether, the federal gift tax liability would

2:10 be approximately $1.9M. As for state-level taxes, New York does not impose a gift tax. However, it’s important to note that if you pass away within three years of making the gift, New York’s estate tax rules may pull that gift back into your taxable estate for state purposes. So, how can nonresident property owners mitigate this exposure? One commonly used strategy involves Holding the U.S. property through a foreign foundation or trust structure.

2:43 For example, The gift of foreign shares — that is, transferring ownership in the foreign entity — is not considered a U.S.-situs asset, and therefore not subject to U.S. gift tax.

2:54 However, the structure must be properly designed, administered independently, and in full compliance with both U.S. and international reporting requirements.

3:04 If you’re a nonresident currently holding U.S. property — or considering making a gift — it is essential to consult with advisors who understand the Interplay between U.S. tax law, estate planning, and international structuring. Thank you for watching.

3:22 If you found this video helpful, please subscribe to the channel for more legal insights and planning strategies tailored to international investors.

3:33 And as always, feel free to reach out if you'd like to discuss a structure that fits your specific situation. I’ll see you in the next episode.

A transcript of the recording, so it reads as speech rather than as prose. It explains the law in general terms and is not advice on your own situation, which turns on facts this video cannot know.