U.S. property owned from Chile: rent, sale and the $60,000 estate tax threshold

First question: who owns it?

U.S. tax on property depends on the owner, not on where the owner lives:

• A U.S. citizen or green card holder living in Chile is taxed by the U.S. on worldwide income and, at death, on worldwide assets. The exemption is large.
• A Chilean without U.S. citizenship or residence is taxed by the U.S. only on U.S. income and U.S. assets. The estate tax exemption is small.

Mixed families, for example a U.S. citizen married to a Chilean, often have one spouse in each group. That affects who should own what.

Estate tax for Chileans with U.S. assets

When a nonresident who is not a U.S. citizen dies, the U.S. taxes their U.S.-situs assets above $60,000. Rates reach 40%. The executor files Form 706-NA within nine months of death, and the IRS must clear the estate before U.S. property or brokerage accounts can be transferred to heirs.

U.S.-situs assets typically include:

• Real estate in the U.S.
• Shares of U.S. companies, including those held at a U.S. or foreign broker.
• Personal property physically in the U.S., such as a car or furniture in a U.S. home.

Deposits in U.S. bank accounts and U.S. life insurance proceeds generally do not count for nonresidents. The U.S.–Chile treaty covers income tax only, so there is no treaty relief for estates. Chile also taxes inheritances, at rates from 1% to 25%, so coordination between both countries' advisors matters.

U.S. citizens: a $15 million exemption on everything

For 2026 the basic exclusion for U.S. citizens and U.S.-domiciled people is $15,000,000 per person, set permanently by the 2025 tax law and indexed for inflation from 2027. Few families reach it, but it applies to worldwide assets, including the apartment in Providencia and the parcela in the south.

Two points catch families in Chile:

• A spouse without U.S. citizenship does not get the unlimited marital deduction. Bequests to them can need a qualified domestic trust, and lifetime gifts to them are tax-free only up to $194,000 a year in 2026.
• Gifts above $19,000 per recipient in 2026 need a Form 709, even when no tax is due.

Renting out U.S. property from Chile

For a nonresident, U.S. rent is by default subject to 30% withholding on the gross rent, with no deductions. Most owners instead elect to treat the rent as business income: they file Form 1040-NR, deduct mortgage interest, taxes, repairs and depreciation, and often owe far less. The state where the property is may also tax it.

A U.S. citizen in Chile reports the same rent on Form 1040 with Schedule E. If Chile also taxes it, a credit applies so the income is not taxed twice in full.

Selling U.S. property

When a nonresident sells U.S. real estate, the buyer generally must withhold 15% of the sale price under FIRPTA and send it to the IRS. That amount is a prepayment, not the final tax. The seller files a U.S. return to calculate the actual gain and can recover the excess. A withholding certificate requested before closing can reduce the amount held back.

Gifts and inheritances crossing the border

A U.S. person who receives more than $100,000 in a year from a foreign individual, including an inheritance from a parent in Chile, reports it on Form 3520. There is no U.S. tax on the gift itself, but the penalty for not reporting can be up to 25% of the amount.

Chile's 2026 reform cuts Chilean gift tax by 50% for gifts formalized between December 1, 2026 and November 30, 2027, once per donor. See our note on the reform.

Planning ahead

Ownership structure, life insurance, timing of gifts and where brokerage accounts are held can each change the outcome. These decisions involve U.S. tax, Chilean tax and estate law in both countries, so we work alongside a U.S. estate attorney and a Chilean abogado when a plan is needed.