QPRT Calculator: Qualified Personal Residence Trust Gift Tax Value

Not tax or legal advice. QPRT structuring requires qualified estate counsel. Results are estimates for planning purposes — actual IRS valuation uses Pub. 1457 Table 2 actuarial factors.

A Qualified Personal Residence Trust (QPRT) lets you transfer your primary home or one vacation property to heirs at a significant discount to full fair market value for gift tax purposes — while you keep the right to live there rent-free for the trust term. Use this calculator to model the taxable gift value, exemption savings, and projected estate tax benefit at the current §7520 rate of 5.0% (June 2026).¹

How the gift tax discount works

When you transfer a home into a QPRT, you are giving your heirs only the remainder interest — the right to receive the property after your retained term expires. You keep the retained interest: the right to live in the home rent-free for the term you specify.

Because the heirs have to wait N years to receive the property — and face the risk that you might not survive — their remainder interest is worth significantly less than the home's full fair market value. Under §2702 of the Internal Revenue Code and Treas. Reg. §25.2702-5, the retained interest is valued using the §7520 rate (120% of the mid-term Applicable Federal Rate, published monthly by the IRS).¹

The math in brief: The retained interest is the present value of the right to use a property worth $V for N years at a discount rate of r. This equals V × r × [(1−(1+r)^(−N))/r] = V × [1−(1+r)^(−N)]. The gift value (what remains after subtracting the retained interest) is V × (1+r)^(−N), further reduced by a survival contingency factor from IRS Table 2000CM.

For a $5M home, a 60-year-old grantor, a 10-year term, and a §7520 rate of 5.0%, the taxable gift is approximately $2.7M — a 54% discount to full market value. A direct transfer of the same home would use $5M of your $15M lifetime exemption (OBBBA 2025). The QPRT saves approximately $2.3M of exemption while removing all future appreciation from your estate.

Why the §7520 rate matters so much

The §7520 rate is the key lever in QPRT planning:

• Higher §7520 rate = lower gift value = better for the grantor. As the rate rises, the present value of the retained term interest increases, leaving a smaller remainder for the taxable gift. At 7%, a 10-year QPRT for a 60-year-old uses approximately 44% of FMV in exemption vs. 54% at 5%.
• Lower §7520 rate = higher gift value = worse for the grantor. In 2020–2022 when rates were near 1%, QPRTs became less attractive because the discount was thin. The current 5.0% rate is favorable compared to that era.
• You may elect any of the three months preceding the gift month — so if June 2026 is 5.0% and July 2026 drops, you can elect the June rate for a July transfer.

See the sensitivity table in the calculator above — the rate row shows how the gift percentage changes across a range of §7520 rates at your chosen age and term.

Choosing the right term

The tension in QPRT design: a longer term = smaller taxable gift = more exemption savings. But a longer term also increases the probability that you don't survive the term, which causes the strategy to fail entirely.

Practical guidelines for term selection at $30M+:

• Ages 50–60: 10–15 year terms typically work well. Mortality risk is manageable (5-year survival rate exceeds 95%), and the exemption savings are substantial.
• Ages 60–70: 7–12 year terms are the common range. A 10-year term for a healthy 65-year-old has approximately 84% survival probability — roughly the right tradeoff for most families.
• Ages 70+: 5–7 year terms significantly reduce mortality risk (85–88% survival) while still capturing meaningful discounts (typically 30–45% below FMV at 5% rate).
• For very valuable properties ($10M+): Even a short term at ages 70–75 can transfer significant exemption savings. A $15M home in a 7-year QPRT for a 72-year-old produces a taxable gift of approximately $7M — saving $8M of exemption vs. an outright transfer.

The mortality risk — what happens if the QPRT fails

If you die during the trust term, the QPRT fails under §2036(a): the property is included in your gross estate at its full date-of-death fair market value, as though the trust was never created. The net result:

• You have not used any of your lifetime exemption (the gift never completed)
• The home is taxed as part of your estate at its then-current value
• You have paid legal fees to establish and maintain the trust — with no tax benefit

This is the downside of the QPRT. However, it is a symmetric risk: the worst case is that you end up in the same position as if you had done nothing. You cannot end up worse than no-QPRT from a tax perspective (you don't pay gift tax AND estate tax).

For families where the mortality risk feels high — perhaps due to a health condition — several alternatives provide similar benefits without the forfeiture risk:

• Outright gift at full FMV: Uses more exemption but removes the property immediately and irrevocably.
• SLAT funded with home equity or proceeds from selling the home: No mortality risk — the trust doesn't revert to the estate on death. See our SLAT guide.
• GRAT funded with appreciated property (not the residence directly): If the residence is sold and proceeds are invested in a high-growth asset, the GRAT captures appreciation tax-free. See our GRAT calculator.

Coordinating with other UHNW estate tools

A QPRT rarely stands alone in a $30M+ estate plan. Common coordination points:

QPRT + lease-back funding strategy

After the retained term, the grantor must pay fair market rent to remain in the home. For a $5M home at 3% rental yield, that's $150,000/year in rent — paid to the trust (which belongs to the heirs) and therefore removed from the grantor's taxable estate. The lease-back is a cost, but it simultaneously depletes the grantor's estate (moving additional assets to heirs free of estate tax).

QPRT + GRAT timing

If a QPRT holds a vacation home and you also own a family business or concentrated position, running a GRAT concurrently removes high-growth assets from the estate in parallel. The two strategies are complementary because they use different assets and different §7520 rate exposures. See our GRAT calculator for the business/equities side.

QPRT + dynasty trust for the remainder

Rather than having the QPRT remainder interest pass directly to children, some families have the home pass to a dynasty trust at the end of the term. This removes the property from the children's estates as well — enabling multi-generational estate tax avoidance on the home's full appreciated value. Requires allocating GST exemption at the time of the gift. See our GST planning guide.

QPRT + ILIT for the mortality risk

Families concerned about the mortality risk sometimes purchase a term life insurance policy inside an ILIT to cover the potential estate tax exposure if the QPRT fails. The ILIT-owned policy pays a death benefit sized to approximate the estate tax that would be owed on the full home value at death. This hedges the downside scenario at relatively low cost. See our ILIT guide.

When a QPRT makes sense in 2026

The QPRT is well-suited for $30M+ families when:

1. The home is worth $3M+ and represents a significant fraction of the estate. At smaller values the attorney fees and complexity may outweigh the savings. At $5M–$15M+, the savings on estate tax exposure are substantial.
2. The §7520 rate is at or above 4.5%. At the current 5.0%, the math is favorable. Rates above 6% make QPRTs even more attractive — consider executing now if you expect rates to fall.
3. The grantor is in good health and the trust term is calibrated to survival probability. Use the calculator above to confirm that the survival probability is above 75% for your chosen age/term combination.
4. The estate exceeds $15M per person (or $30M for a married couple) even after other planning. Below that threshold the QPRT has no estate tax benefit (though it can still be useful for non-resident-alien planning or state estate tax purposes in some states).
5. Future appreciation in the home is expected to be significant. A QPRT on a $5M Manhattan apartment with strong appreciation potential removes far more estate tax exposure than the same dollar amount of a stable-value property.

1. §7520 rate June 2026 = 5.0%. IRS §7520 Interest Rates; Rev. Rul. 2026-11 (IRB 2026-24).
2. Estate and gift tax exemption $15M per person (permanent, inflation-indexed from 2027): One Big Beautiful Bill Act, Pub. L. No. 119-21, §70101 (July 2025); 40% rate under IRC §2001(c).
3. QPRT valuation rules: IRC §2702; Treas. Reg. §25.2702-5(c); IRS Publication 1457 (Actuarial Values — Book Aleph), Table 2 (Qualified Personal Residence Trusts).
4. §2036(a) estate inclusion on QPRT failure: IRC §2036(a); Treas. Reg. §20.2036-1. Grantor must survive the trust term for the QPRT to succeed.
5. IRS Table 2000CM (combined unisex mortality, Rev. Rul. 2023-2): used for all §7520 actuarial computations for transfers on or after May 1, 2023. IRS Actuarial Tables.

Values verified June 2026. §7520 rate changes monthly — always confirm the current rate at IRS.gov before executing. Survival factors are approximations from IRS Table 2000CM; use IRS Pub. 1457 Table 2 factors for formal gift tax return preparation.