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:
“Some rough political choices lie ahead. Should affirmative action be retained? Should preference be given to people on the basis of income rather than race? Should the system be—and can it be—scrapped altogether?”
—David K. Shipler (b. 1942)
“I have no doubt that it was a principle they fought for, as much as our ancestors, and not to avoid a three-penny tax on their tea; and the results of this battle will be as important and memorable to those whom it concerns as those of the battle of Bunker Hill, at least.”
—Henry David Thoreau (1817–1862)
“... of all the aspects of social misery nothing is so heartbreaking as unemployment ...”
—Jane Addams (1860–1935)
“If you would feel the full force of a tempest, take up your residence on the top of Mount Washington, or at the Highland Light, in Truro.”
—Henry David Thoreau (1817–1862)
“Baseball is the religion that worships the obvious and gives thanks that things are exactly as they seem. Instead of celebrating mysteries, baseball rejoices in the absence of mysteries and trusts that, if we watch what is laid before our eyes, down to the last detail, we will cultivate the gift of seeing things as they really are.”
—Thomas Boswell, U.S. sports journalist. “The Church of Baseball,” Baseball: An Illustrated History, ed. Geoffrey C. Ward, Knopf (1994)