What Is a Qualified Personal Residence Trust (QPRT)?

A qualified personal residence trust (QPRT) is an irrevocable trust that holds your home for a fixed number of years while you keep living in it; when the term ends, the home passes to your beneficiaries, and the taxable gift is only the value of their future interest, not the home's full value. Federal tax law lets that future interest be valued using the IRS's actuarial tables (IRC §2702 and §7520), which is where the gift-tax saving comes from. Three things decide whether it works:

• you must outlive the term. If you die first, the home is pulled back into your taxable estate (§2036);
• the trust must follow strict IRS rules about what it holds and how the home is used (Treas. Reg. §25.2702-5);
• the trade-offs must make sense for you, including giving up the home at the end of the term and a carryover income-tax basis for your heirs.

At a glance

How a QPRT works

1. You sign an irrevocable trust and transfer your home (deed) to it.
2. You keep the right to live there for a fixed term you choose, for example a set number of years. During the term you're the "term holder."
3. You make a taxable gift on day one, but only of the beneficiaries' future (remainder) interest. Your retained right to live there is subtracted.
4. When the term ends, the home passes to your beneficiaries outright or stays in trust for them, as the document says.
5. If you want to keep living there after the term, you'll need an arrangement such as a lease. Your attorney sets the terms.

Why the gift is discounted

Normally, when you give property to a trust for family members and keep an interest yourself, IRC §2702 values your retained interest at zero, so the whole value is a gift. Congress made an exception for a trust that holds only "a residence to be used as a personal residence" by the term holders (§2702(a)(3)(A)(ii)). For a QPRT, your retained right to use the home is valued under the IRS tables, and only the rest is a gift.

Those tables use the §7520 rate, which is 120% of the federal midterm rate for the month of the transfer, rounded to the nearest 0.2%. The IRS publishes it monthly. For November 2026 it's 6.2% (Rev. Rul. 2026-21). All else equal, a higher §7520 rate generally increases the value assigned to a retained term interest under the IRS tables, which can reduce the taxable gift — confirm the figures with your attorney for your ages, term and transfer month. A longer term does the same, but raises the risk that you won't outlive it.

The gift uses part of your lifetime exemption, which for 2026 is $15,000,000 per person (Rev. Proc. 2025-32). A gift of a future interest doesn't qualify for the $19,000 annual exclusion (IRC §2503(b)), so it may require a gift-tax return. Any growth in the home's value after the transfer happens outside your estate if the plan works.

The rules a QPRT must follow

Treasury Regulation §25.2702-5(c) requires the trust document itself to include these rules:

• One residence. The trust can hold only one residence used or held for use as your personal residence. Limited cash is allowed for expenses (including mortgage payments) and improvements due within six months, and to buy a home under contract within three months.
• Personal use. The home must be your principal residence or one other residence, used primarily as a residence. Renting it to an unrelated party so it isn't available to you at all times ends QPRT status (the regulation's Example 5). A hotel-style or B&B use doesn't qualify.
• Income to you. Any trust income must be paid to you at least once a year.
• No early distributions to others during your term.
• If it stops qualifying, for example because the home is sold or no longer used as your residence, the trust must within 30 days either distribute the assets to you or convert them to a qualified annuity for the rest of the term. That can undo much of the plan's benefit.
• No buying it back. The trust must prohibit selling the home to you, your spouse or an entity either of you controls during the term, and afterward while the trust is a grantor trust.
• A limit of two. You can't be the term holder of more than two personal residence trusts.

The big risk: dying during the term

Under IRC §2036(a), property you've transferred is pulled back into your gross estate if you kept the right to use it "for any period which does not in fact end before" your death. If you die during the QPRT term, the home's value at death is included in your estate, much as if you'd never set up the trust. The plan's discount is lost. That's why the term length is a judgment about health and life expectancy that you make with your attorney.

What happens at the end of the term

• Ownership passes to the remainder beneficiaries or stays in trust for them.
• Living there afterward usually requires a lease at fair market rent. The details, including how it's documented, matter, so follow your attorney's structure.
• Income-tax basis. Property received by gift generally keeps the donor's basis (§1015(a)), while property inherited at death generally gets a basis equal to fair market value at death (§1014(a)). If the QPRT works, your heirs take your carryover basis, so a later sale could mean more capital-gains tax than an inheritance would. Weigh that against the estate-tax savings.
• Property taxes and homestead benefits depend on state and local law. Ask whether the transfer triggers reassessment or affects an exemption where the home is. Florida homeowners should also review Florida homestead devise restrictions.

Who might consider a QPRT, and who might not

Might consider:

• people whose estates may exceed the federal or state exemption;
• owners of a valuable primary or vacation home they intend to leave to family;
• people who are comfortable giving up ownership at the end of the term.

Might not be a fit:

• people whose estates are likely to stay under the exemption, where the carryover-basis cost may outweigh any estate-tax saving;
• anyone who may want to sell, refinance or move freely during the term;
• anyone whose health makes outliving the term uncertain.

A QPRT is often weighed alongside other techniques: GRATs, SLATs, ILITs and grantor trusts.

Featured attorneys: Haute Lawyer Network members who handle estate planning include James Voeller, an estate planning attorney in San Antonio, Texas, and a Certified Estate Planning Law Specialist (EPLS) by the Estate Law Specialist Board, Inc., whose firm provides estate planning, tax planning, asset protection and business planning services, and Michael M. Marques of The Marques Law Firm, PLLC, whose practice covers estate planning, probate, tax audit representation, and business and succession planning with a focus on generational wealth preservation. Browse Estate Planning & Probate attorneys or Find a Lawyer. *Listed attorneys are paid members of the Haute Lawyer Network. Editorial selection, not a ranking.*

Related

• What Is an Irrevocable Trust?
• What Is Gift Tax?
• Can a Trust Reduce Estate Taxes?
• What Is Portability of the Estate Tax Exemption?
• Estate Planning for High-Net-Worth Families
• What Is a Homestead Exemption?

Sources

• 26 U.S.C. §2702, §7520, §2036, §1014, §1015, §2503, §2001 (Cornell LII; §§2702, 7520, 2036, 1014, 1015 fetched Nov. 3, 2026; §§2503, 2001 fetched Nov. 2, 2026)
• 26 CFR §25.2702-5, Personal residence trusts (Cornell LII; eCFR copy also fetched; Nov. 3, 2026)
• IRS, Section 7520 interest rates (page updated Oct. 23, 2026; fetched Nov. 3, 2026)
• IRS, Rev. Proc. 2025-32 (fetched Nov. 2, 2026)
• IRS, What's new — estate and gift tax (fetched Nov. 2, 2026)

*This article is general information, not legal or tax advice. Tax and property law vary by state and change over time; talk with an estate planning attorney and tax adviser before transferring a home to a trust.*