I'm a Canadian with a Florida condo. Do I really only get a $60,000 US estate tax exemption?

Usually no, and the reason is a treaty provision most Canadian-facing articles mention without working through. Left alone, a Canadian who isn’t a US citizen gets a credit of $13,000 against US estate tax, covering exactly $60,000 of taxable estate. The treaty lets the estate claim instead a pro-rata share of the much larger credit a US citizen’s estate gets. It isn’t automatic: the IRS’s position is that you claim it on a filed Form 706-NA.

Is the $60,000 US estate tax exemption real?

It’s real as arithmetic and as a filing threshold, and it isn’t what the statute says. IRC 2102(b)(1) reads “A credit of $13,000 shall be allowed against the tax imposed by section 2101” (IRC 2102). The figure $60,000 appears nowhere in it. $60,000 is famous because of the rate table: under IRC 2001(c) the tentative tax on exactly $60,000 is exactly $13,000 (IRC 2001), so the credit covers a $60,000 taxable estate and nothing past it.

• Except as section 2107 provides for expatriates, the tax lands on the taxable estate of a “decedent nonresident not a citizen of the United States” (IRC 2101), and only the part “situated in the United States” at death is in the gross estate (IRC 2103). Section 2103 sets no situs rule of its own; it delegates.
• “Nonresident” here is a question of domicile rather than a day count. The estate tax regulation sends you out to the definitions (Reg 20.2101-1(a)), where a nonresident decedent is one who at death “had his domicile outside the United States” (Reg 20.0-1(b)). That is a different test from the day count that settles income tax residence, and the two answers need not match.
• $60,000 is also the filing threshold, and past gifts eat into it: a return is due where US-situated assets “together with the gift tax specific exemption and the amount of adjusted taxable gifts” exceed it (Instructions for Form 706-NA, Rev. September 2025).

The treaty changes that default, and it has to be invoked; for the wider picture, see the guide to Canadians buying US property.

What does the Canada-US treaty actually give me?

A bigger credit, if the estate claims it. Article XXIX B(2) gives the estate of an individual “other than a citizen of the United States” who was a resident of Canada at death the greater of a pro-rated share of the credit allowed to a US citizen’s estate and the ordinary nonresident credit (Article XXIX B(2), Schedule IV). For deaths in 2026 the citizen’s credit runs off a basic exclusion amount of $15,000,000 (IRC 2010(c)(3)(A)).

	If nobody claims the treaty	If the treaty credit is claimed on a filed 706-NA
Credit against the tax	$13,000, which is the figure IRC 2102(b)(1) actually states	A pro-rata share of the credit behind the 2026 basic exclusion of $15,000,000, allowed to the extent a treaty obligation requires it (IRC 2102(b)(3)(A))
Taxable estate sheltered	Exactly $60,000, which is arithmetic on the IRC 2001(c) rate table and not a figure any statute states	Depends on the fraction, and property a treaty exempts is stripped out of the numerator, so the fraction is narrower than most write-ups show
What gets filed	Form 706-NA is still due once US-situated assets, together with the gift tax specific exemption and adjusted taxable gifts, exceed the $60,000 filing threshold	Form 706-NA plus a statement invoking the treaty and showing the computation, which is the IRS position stated in its internal manual
Adjusted for inflation?	No. IRC 2102(b)(1) fixes the credit at a flat $13,000, so the $60,000 break-even is flat too	Yes, though not for 2026: the $15,000,000 applies to deaths in 2026 as a flat statutory figure, and the first inflation adjustment applies to deaths in 2027

Two things narrow the credit, and neither shows up in the usual write-up. The first is domestic. IRC 2102(b)(3)(A) prorates the applicable credit amount by US-situated gross estate over entire gross estate wherever situated, then adds that “property shall not be treated as situated in the United States if such property is exempt from the tax imposed by this subchapter under any treaty obligation of the United States” (IRC 2102). Treaty-exempt property leaves the numerator, shrinking the fraction and the credit with it, and the IRS manual’s version of the formula omits that sentence.

The second is in the treaty: XXIX B(2) allows the pro-rata limb “only if all information necessary for the verification and computation of the credit is provided.” That’s a substantive condition on the credit, and it says nothing about which form carries it.

• The credit drops by any unified credit already used against gifts (IRC 2102(b)(3)(B)); XXIX B(2) says the same.
• It’s capped: the credit “shall not exceed the amount of the tax imposed by section 2101” (IRC 2102(b)(4)), so at most it zeroes the bill and it never refunds.

What has to be filed, and by when?

Form 706-NA, within 9 months of the date of death. The instructions require the return once US-situated assets plus the gift tax specific exemption and adjusted taxable gifts exceed the $60,000 threshold, and say to “File Form 706-NA within 9 months after the date of death unless an extension of time to file was granted” (Instructions for Form 706-NA, Rev. September 2025). The request for more time is Form 4768.

The claim has a stated home: the IRS manual says a statement “invoking the right under the Treaty described above and showing the tax calculation must be attached to Form 706-NA” (IRM 4.25.4.3.1). Read that for what it is. By its own Purpose and Audience statements, the Internal Revenue Manual is internal examination guidance written for IRS examiners. It doesn’t say what happens if the statement is missing, and neither it nor the statute answers whether the credit is lost or the gap is only a disclosure failure. So the claim gets made there, and the price of omitting it is unsettled.

A separate condition is statute. IRC 2106(b) denies a nonresident’s estate the section 2106(a)(1) and (2) deductions, meaning expenses, losses, debts and taxes on the one side and public, charitable and religious transfers on the other, “unless the executor includes in the return … the value … of that part of the gross estate of such nonresident not situated in the United States” (IRC 2106). The worldwide numbers belong on the return either way, since the treaty fraction needs them. And a mortgage is a deduction question rather than a cut in the condo’s situs value, which is not the same as a full write-off: section 2106(a)(1) allows only “That proportion of the deductions specified in sections 2053 and 2054 … which the value of such part bears to the value of his entire gross estate, wherever situated” (IRC 2106(a)(1)), so the mortgage deduction runs on its own US-over-worldwide proportion.

What counts as US property, and what surprises people?

The condo, and the furniture inside it. The situs rule for real property is regulatory rather than statutory: IRC 2104 has no real-property subsection at all. Reg 20.2104-1(a)(1) and (a)(2) make a nonresident non-citizen’s property US-situs if it is “(1) Real property located in the United States. (2) Tangible personal property located in the United States, except certain works of art on loan for exhibition …” (Reg 20.2104-1).

• Stock is US-situs by place of incorporation. IRC 2104(a) puts that as a necessary condition, that shares are US property “only if issued by a domestic corporation” (IRC 2104); the affirmative deeming is the regulation’s, reaching domestic-corporation shares “irrespective of the location of the certificates” (Reg 20.2104-1).
• US mutual funds are US-situs for anyone dying after December 31, 2011. The regulated investment company carve-out now reads “This subsection shall not apply to estates of decedents dying after December 31, 2011” (IRC 2105(d)(3)), and with it spent the ordinary rule takes over: a regulated investment company is by definition a “domestic corporation” (IRC 851(a)), so its shares are US property under IRC 2104(a). Anything telling a Canadian that US funds escape the tax is quoting a dead provision.
• Life insurance on the person’s own life is never US property, whoever wrote the policy (IRC 2105(a)). A policy owned on someone else’s life is its own question.
• US bank deposits are generally outside, under IRC 2105(b)(1) with IRC 871(i)(2)(A), where the interest isn’t effectively connected with a US trade or business (IRC 2105(b); IRC 871(i)). A brokerage account holding US shares isn’t a deposit, so IRC 2104(a) still reaches the shares.

Statute and regulation both go quiet where much of the planning happens. IRC 2104 covers stock, certain revocable and within-three-years transfers and debt obligations of a US person or government; the regulation adds a catch-all for intangibles “issued by or enforceable against a resident of the United States or a domestic corporation or governmental unit” (IRC 2104; Reg 20.2104-1). Neither names a partnership or LLC interest, so the vehicle changes the question rather than settling it. See how a Canadian should own US property. If the plan is to sell, the withholding runs off the gross price: getting the US withholding back after a sale.

What about the US$1.2 million small-estate rule?

It exists, almost nobody publishes it, and it doesn’t cover the condo. XXIX B(8) says that provided the worldwide gross estate at death of “an individual who was a resident of Canada (other than a citizen of the United States) at the time of death” doesn’t exceed 1.2 million US dollars “or its equivalent in Canadian dollars,” the US may tax property in the estate “only if any gain derived by the individual from the alienation of such property would have been subject to income taxation by the United States in accordance with Article XIII (Gains)” (Article XXIX B(8), Schedule IV).

• Real property sits squarely inside Article XIII. The taxing rule is paragraph 1, that gains “derived by a resident of a Contracting State from the alienation of real property situated in the other Contracting State may be taxed in that other State” (Article XIII(1), unamended by any protocol). The definition it runs on says that “in the case of real property situated in the United States,” the term “means a United States real property interest and real property referred to in Article VI (Income from Real Property) situated in the United States, but does not include a share of the capital stock of a company that is not a resident of the United States” (Article XIII(3)(a), Schedule V). So a gain on the condo would have been US-taxable, and XXIX B(8) leaves it inside the US estate tax even for an estate under the ceiling.
• The US$1.2 million is a flat treaty figure with no indexing language in the paragraph, so it shouldn’t be described as adjusted or growing.

The IRS has a name for it. The Form 706-NA instructions carry a heading “Canadian Small Estate Relief” and describe a “small estate exemption (worldwide estate of a Canadian resident decedent not more than $1.2 million) from tax on U.S. securities or certain other U.S. situs property under the 1995 Protocol to the Canadian income tax treaty,” claimed by listing the exempt assets “in a statement attached to the return specifying that you are relying on the treaty” (Instructions for Form 706-NA, Rev. September 2025). Securities are what it names first, and the treaty text is the authority for what sits outside the shield.

What should I do next?

Two things, in this order. Get the US-situated assets valued and listed, contents included, since the filing threshold and the treaty fraction both run off that figure and the worldwide total. Then settle who prepares the 706-NA and the treaty statement, before there’s a death and a 9-month clock. If the place is used seasonally, what a snowbird’s Florida condo actually triggers covers the income and residency side.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.