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?
Can the residence be sold while it is in the QPRT?
Yes. The residence can be sold and the proceeds can be reinvested in a new residence. Because a QPRT is a grantor trust, any gain recognized on the sale of a principal residence should qualify for the $250,000/$500,000 exclusion of gain from the sale of a principal residence, provided all of the other applicable tax code requirements are met. The exclusion of gain does not apply to the sale of a personal residence that is not a principal residence, such as a vacation home.
If the proceeds of sale are not reinvested in a personal residence, the QPRT will convert to a Grantor Retained Annuity Trust or "GRAT" and will pay an annuity to the donor for the balance of the QPRT term.