Qualified Personal Residence Trust
- How does it work?
- What are the key benefits of a QPRT??
- If I have a second home, can I use the QPRT for both homes?
- Is a gift tax return required when a gift is made to a QPRT?
- Are there any other tax benefits offered by a QPRT?
- What If I Die During the QPRT's Term?
- Does my age and the QPRT term affect the tax consequences of the QPRT?
- What if I outlive the QPRT's term and want to continue living in the residence?
- Can the residence be sold while it is in the QPRT?
- Will my children receive the residence with step up in basis at the End of the QPRT Term?
- Do any income tax returns have to be filed in connection with a QPRT?
Will my children receive the residence with step up in basis at the End of the QPRT Term?
No. Gifts made during lifetime are subject to a carryover basis. Thus, the basis of the residence when your children receive the residence would be your original purchase price plus the amount of any capital improvements you made while owning the property. This could result in ordinary or capital gains tax if the children sell the home, however, they would benefit by limiting their tax, for example to the 15% capital gains rate, as opposed to paying the 50% estate tax rate.