Income Tax Aspects of Residence Trusts
A residence trust (PRT or QPRT) will remain a grantor trust during the grantor’s retained term. Grantor status is important, because it will allow the grantor to take mortgage interest and property tax deductions, and will also avail the grantor of the Code Section 121 gain exclusion.
Following the expiration of the residence term, the grantor status of the trust usually ceases, unless the trust is drafted in a manner to make the trust intentionally grantor following the expiration of the term. This may be advantageous if the trust holds a vacation home and the grantor wishes to deduct mortgage interest and expenses associated with that home.
Read more about this topic: Qualified Personal Residence Trust
Famous quotes containing the words income, tax, aspects, residence and/or trusts:
“We commonly say that the rich man can speak the truth, can afford honesty, can afford independence of opinion and action;—and that is the theory of nobility. But it is the rich man in a true sense, that is to say, not the man of large income and large expenditure, but solely the man whose outlay is less than his income and is steadily kept so.”
—Ralph Waldo Emerson (1803–1882)
“But the tax collector, standing far off, would not even look up to heaven, but was beating his breast and saying, ‘God, be merciful to me, a sinner!’”
—Bible: New Testament, Luke 18:13.
“Grammar is a tricky, inconsistent thing. Being the backbone of speech and writing, it should, we think, be eminently logical, make perfect sense, like the human skeleton. But, of course, the skeleton is arbitrary, too. Why twelve pairs of ribs rather than eleven or thirteen? Why thirty-two teeth? It has something to do with evolution and functionalism—but only sometimes, not always. So there are aspects of grammar that make good, logical sense, and others that do not.”
—John Simon (b. 1925)
“My residence was more favorable, not only to thought, but to serious reading, than a university; and though I was beyond the range of the ordinary circulating library, I had more than ever come within the influence of those books which circulate round the world, whose sentences were first written on bark, and are now merely copied from time to time on to linen paper.”
—Henry David Thoreau (1817–1862)
“In society, in the best institutions of men, it is easy to detect a certain precocity. When we should still be growing children, we are already little men. Give me a culture which imports much muck from the meadows, and deepens the soil,—not that which trusts to heating manures, and improved implements, and modes of culture only!”
—Henry David Thoreau (1817–1862)