QPRT Example

Let’s assume

  • Home FMV today, $1,000,000
  • QPRT term: 20 years
  • Section 7520 rate: 5%

Retained Interest Value = $1,000,000 / (1+5%)^20 = 376,889.48

Taxable Gift = $1,000,000 – $376,899.48 = $623,110.52

If you do QPRT, this house will only take $623,110.52 out of your $15 million gift tax exemption

Otherwise, this house may be worth $3 million in 20 years and it will take $3 million gift tax emption