What is a qualified personal residence trust (QPRT)?
A qualified personal residence trust (QPRT, pronounced “Q-Pert,” and sometimes referred to as a grantor retained interest trust, or GRIT) is an irrevocable trust into which you transfer a primary residence or vacation home while retaining the right to live there rent free for a specified number (term) of years. At the end of the term of years, the property passes outright to your children (or whomever you’ve named as the trust beneficiaries). Tax advantages of a QPRT When you transfer a home into a QPRT, you’re considered to have made a taxable gift to the trust beneficiaries. However, the value of the gift isn’t the full fair market value of the home, as it would be with an outright transfer. Rather, the gift can be discounted to reflect your retained interest (i.e., your right to live in the home). Note: You can leverage your $1 million lifetime gift tax exemption, to the extent it has not already been used, to offset any gift tax that is due. Another tax benefit of a QPRT is that, a
