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?
Are there any other tax benefits offered by a QPRT?
Another tax and economic benefit is that all of the future appreciation of the residence will be transferred to the children estate and gift tax-free. A QPRT, as a result, is a powerful tool for freezing the value of your estate. Based on the prior example, assuming that the $1,000,000 residence appreciates at 4% per year for the 12-year term, the residence would be valued at $1,800,944 15 years from now. All of the appreciation during the 15-year term would inure to the benefit of your children. Thus, by making a gift valued for estate and gift tax purposes at $310,380, you would effectively transfer an asset worth $1,800,944. Assuming your estate is in the maximum 50% federal estate tax bracket, this would save you $745,282 in federal estate taxes!