Have You Considered “Gifting” Your Home Away?

GiftWrappedHouse

Passing along a property to a loved one as part of your estate planning is an invaluable gift. That said, in order to avoid being taxed unnecessarily, you want to consider what’s known as a “QPRT” or Qualified Personal Residence Trust. Real estate values in the Greater Boston area have come way down since the real estate recession in 2010 and combined with this trust, lower property values could save you significant money on gift and estate taxes.

QPRTs offer the opportunity for people to move a home out of their estate, while still allowing them to live in it for a time. This arrangement is ideal for a parent gifting a property to their child, and timing could not be better to consider this, as you would be removing the home from your estate at a time when property values are low. You will not pay estate taxes on it, and down the road you and yours will enjoy the benefits when its value increases, instead of paying a giant estate tax bill on a home that has increased in value over the same time period. In other words, you are guaranteeing yourself a lower gift-tax amount.

Here’s what happens: you move the asset out of your estate and put it into a QPRT for say, ten years. Those ten years can be spent living in the home exactly as you always have. You will file a gift-tax return the first year, which through a very intricate IRS formula could even prove to be profitable from a discount. After ten years has passed, the home transfers to your children or beneficiaries, and they legally own the home, meaning it will not be subject to estate taxes! Do note however, that if your desire is to continue living in your Massachusetts home after this period you must pay your beneficiaries fair-market rent, or risk trouble with the IRS. In the event of your death, your beneficiaries would not have to pay inheritance taxes on the home. This is a great option for many Southborough, Marlborough, and Grafton homeowners. It may be something to consider for your Massachusetts home!

I came across a good article on QPRTs on the Bank of New York website.

 

About Steve Levine

For nearly three decades, Steve Levine of REMAX Professional Associates, has been one of the top Real Estate agents in the Central Massachusetts.  A ten-time honoree as #1 REMAX Agent in New England, he brings to the table the experience that comes from working successfully with over 2000 Buyers and Sellers, through all types of real estate markets.  Adept at everything from land development, to custom home building, to residential single family and condo sales, his “can do” approach has made him one of the most sought after agents in the region.

A consummate marketing aficionado, and recognized as one of the most innovative Realtors in the industry, he has spoken nationally on many occasions, training other real estate agents on customer service, marketing, and web presence, and is currently developing a suite of instructional videos designed to enable agents to take their business to the next level.

When not out selling Massachusetts’s real estate, Steve is a passionate photographer, musician and writer, and is constantly looking for new ways to express himself.

For a private consultation on your Massachusetts real estate needs, he can be reached by email at steve@shrewsbury.net, by phone at 508 735-4663.

You can also check out his photography website at www.stellarimages.us .