Canadian Snowbird with a $1.5M Florida Condo Dying in 2026: US Estate Tax Exposure, Canadian Deemed Disposition, and How to Avoid Paying Tax Twice

The Scenario: A Mississauga Snowbird Dies Owning a $1.5M Florida Condo

Robert spent five months a year in Naples for the past twelve years. Classic Canadian snowbird. He filed his US non-resident tax returns annually, maintained his OHIP coverage, and kept his Mississauga house as his primary residence. At death, he was unambiguously a Canadian tax resident — and he owned US-sited real property worth $1.5M.

Two countries now want a piece of the same asset. Here is how each claim works, and how the Canada-US Tax Treaty prevents (most of) the double taxation.

Tax Event #1: US Federal Estate Tax on the Florida Condo

The US imposes federal estate tax on US-sited assets owned by non-resident aliens — including Canadian citizens. US-sited assets include real estate in the US, tangible personal property located in the US, and certain US securities.

Without a tax treaty, the exemption for non-resident aliens is only US$60,000. On a $1.5M condo, that would produce a devastating tax bill. But the Canada-US Tax Treaty changes the math entirely.

The Canada-US Treaty prorated unified credit

Under Article XXIX-B of the Canada-US Tax Treaty, Canadian residents get a prorated share of the full US unified credit. In 2026, the US estate tax exemption is US$15M per individual (permanently raised by the One Big Beautiful Bill Act). The unified credit equivalent is approximately US$5,820,600.

The treaty prorates this credit by the ratio of US-sited assets to worldwide assets:

The prorated credit far exceeds the tentative tax. Result: $0 US estate tax on Robert's $1.5M Florida condo. For a $4M worldwide estate, the treaty fully shelters the US tax.

For more on how the US$60,000 non-treaty threshold works and why it catches Canadians off guard, see our guide to the US estate tax threshold for Canadian snowbirds.

Tax Event #2: Canadian Deemed Disposition on the Florida Condo

Regardless of what happens in the US, Canada taxes the accrued capital gain on the Florida condo through the deemed disposition rule under section 70(5) of the Income Tax Act. Robert is deemed to have sold every capital property he owned at fair market value immediately before death.

The Florida condo gain: $1,500,000 FMV minus $900,000 ACB = $600,000 capital gain.

Under the 2026 tiered inclusion rate (post-2024 federal budget): 50% inclusion on the first $250,000 of annual capital gains, 66.67% on gains above $250,000. But the condo gain is not the only gain on Robert's terminal return — the Canadian investments add another $150,000.

At $1.2M of taxable income, virtually everything above the basic personal amount is taxed at Ontario's top combined rate of 53.53%. The RRSP collapse alone accounts for roughly $375,000 of the tax. The capital gains portion (attributable to the Florida condo and Canadian investments combined) accounts for approximately $195,000–$210,000.

The TFSA ($300,000) passes tax-free to the son as named beneficiary — no income inclusion, no probate. It's the only bright spot on this return.

The Foreign Tax Credit: How the Treaty Prevents Double Taxation

In Robert's case, the treaty prorated credit eliminates US estate tax entirely. No US tax paid means no foreign tax credit to claim on the Canadian return. The Canadian deemed disposition tax stands on its own.

But for estates where US estate tax is payable (worldwide estate above ~US$10M with significant US property), the mechanism works as follows:

The practical result: the estate pays the higher of the two countries' tax on the Florida condo, not the sum of both. For most Canadian snowbirds, the Canadian deemed disposition tax is the larger number, and the US estate tax (if any) is fully credited against it.

Florida Ancillary Probate: The Hidden Cost

Florida has no state estate tax and no inheritance tax. But it does require probate on real property — and when the deceased is a non-resident, the process is called ancillary probate.

Robert's primary estate is administered in Ontario. But the Naples condo cannot be transferred to his son through the Ontario probate process alone. A separate proceeding must be filed in the circuit court of Collier County, Florida.

Ancillary probate also creates a public record in Florida. The will, the property value, and the heir's name all become publicly accessible court documents. For privacy-minded Canadians, this is an additional reason some choose to hold US property through a structure (corporation or trust) that avoids Florida probate.

Ontario Probate: What Goes Through the Ontario Will

Back in Ontario, probate applies to assets passing through the will at $15 per $1,000 (1.5%) above $50,000. The Florida condo does not go through Ontario probate — it's real property located outside Ontario and must be dealt with through Florida ancillary probate. The TFSA and RRSP bypass probate via beneficiary designation.

For the full provincial comparison, see our probate fees Canada 2026 guide.

Structuring Options: Canadian Corporation vs Cross-Border Trust vs Insurance

The question every snowbird's advisor hears: “Should I hold the Florida condo in a corporation?” The answer depends on the estate size.

Option 1: Hold through a Canadian corporation

The corporation owns the condo. At death, Robert owns shares (Canadian-sited), not US real property. Result: no US estate tax filing, no Florida ancillary probate.

The trade-offs:

• Corporate capital gains: the corporation pays tax on the gain at the 66.67% inclusion rate for corporations — and the shareholder pays tax again when dividends are extracted. The integration is imperfect and often produces a higher total tax than personal ownership
• Shareholder benefit risk: under section 15(1) of the ITA, if Robert uses the condo personally without paying fair market rent to the corporation, the CRA assesses a taxable benefit equal to the FMV of the rent. This is actively audited
• FIRPTA and US compliance: the Canadian corporation must file US tax returns annually as a foreign corporation owning US real property. FIRPTA withholding applies on sale
• Annual costs: $3,000–$5,000/year in additional accounting and compliance for the corporate structure

Option 2: Cross-border irrevocable trust

A properly structured cross-border trust can remove the condo from both the US and Canadian estates. But irrevocable means irrevocable — Robert loses control of the property. Setup costs run $15,000–$25,000, with $3,000–$5,000/year in ongoing trust compliance and tax filings in both countries.

This makes sense for US-sited assets above US$5M where the annual compliance cost is a rounding error relative to the tax savings. For a $1.5M condo, the math rarely works.

Option 3: Cross-border life insurance

The simplest approach: keep the condo in personal name, accept the tax at death, and carry a life insurance policy that covers the estimated US estate tax liability (if any) and the Canadian deemed disposition tax. The insurance proceeds arrive tax-free and immediately — no probate, no cross-border filings.

For a 65-year-old male non-smoker, a $200,000 permanent life insurance policy costs roughly $4,000–$8,000/year in premium. Over 10–15 years, the cumulative premium ($40K–$120K) is often less than the ongoing compliance costs of a corporate structure — and the policy proceeds are guaranteed, not dependent on tax-law changes.

Side-by-Side: The Full Estate Settlement

The RRSP collapse ($700K at top bracket) is the single largest tax hit — roughly $375,000 of the $583,000 total income tax. The Florida condo's $600K capital gain adds approximately $195,000. Ironically, the Florida property that feels like the “cross-border problem” produces less tax than the RRSP sitting quietly in a Canadian brokerage.

What If Robert Had a Surviving Spouse?

If Robert's spouse were alive and a Canadian resident, the tax picture changes dramatically:

• Spousal rollover on the Florida condo (s. 70(6)): the condo transfers to the surviving spouse at Robert's ACB of $900,000. No deemed disposition, no capital gains tax. Deferred until the spouse's death or sale
• RRSP rollover (s. 146(8.1)): the $700,000 RRSP transfers to the spouse's RRSP. No income inclusion on the terminal return. Deferred until the spouse withdraws
• US estate tax: the Canada-US Treaty also provides a marital credit for property passing to a surviving spouse, further reducing any US estate tax exposure

With the spousal rollover, the terminal return tax drops from ~$583,000 to approximately $50,000–$70,000 (just the partial-year income and any minor non-deferred gains). The tax is not eliminated — it's deferred to the surviving spouse's death. But the cash-flow relief is enormous.

The Part Most Snowbirds Miss: You Still Need a US Estate Tax Return

Even when the treaty credit eliminates US estate tax entirely, the executor may still need to file IRS Form 706-NA (United States Estate Tax Return for non-residents) to claim the treaty benefits. The prorated credit is not automatic — it must be elected on the return. Without the filing, the IRS could assess the non-treaty US$60,000 exemption by default.

The 706-NA filing also triggers disclosure of the deceased's worldwide assets to the IRS. Some Canadian executors are surprised by this. The alternative — not filing and hoping the IRS doesn't notice the US property — is a compliance risk that can produce penalties exceeding the estate tax itself.

Province Matters: Ontario vs BC vs Alberta at Death

Robert lived in Ontario. The income tax and probate would differ in other provinces:

The income tax differences between provinces are compressed at this income level — top rates differ by only ~5 percentage points. The probate gap is more visible: Ontario charges $21,750 on $1.5M through the will, while Alberta charges $525 and Quebec (notarial will) charges $0. On this estate, moving from Ontario to Alberta before death would save approximately $75,000 — mostly from the lower top marginal rate, with $21,000 from probate savings.

Executor Checklist: Cross-Border Estate with Florida Property

The Decision That Matters Most

For Robert's $4M estate, the Canada-US Treaty already eliminates the US estate tax. The Florida condo is not the tax disaster many snowbirds fear — at this estate size. The real damage comes from the RRSP collapse ($375,000 of tax on $700,000) and the high income stacking that pushes the capital gains into the 66.67% inclusion tier.

The highest-impact pre-death moves for this estate:

• Accelerated RRSP-to-RRIF conversion and strategic drawdown in the 60s and early 70s — pulling the RRSP balance down from $700K to $300K over a decade reduces the terminal return tax by roughly $200,000
• Naming a successor holder (not beneficiary) on the TFSA — preserves the TFSA room and avoids even the minor administrative friction of a beneficiary claim
• Beneficiary designations on the RRSP and investments where possible — keeps assets out of Ontario probate and saves $21,750

The corporate structure, the trust, the insurance — those are tools for specific situations. The RRSP drawdown strategy is the one lever that saves the most money for the most snowbirds with the least complexity.

For the full cross-border framework, see our cross-border estate planning Canada-US 2026 guide and our inheritance tax Canada 2026 complete guide.