By making gifts during their lifetime, people take advantage of their estate-tax exemptions in an orderly way, using techniques to stuff as many assets as possible into the nontaxable portion of the estate.
That appears to be what the Clintons did, Sloan said, using a structure known as a qualified personal residence trust that allows them to discount the value of their house for estate tax purposes.
‘Reduce’ Value
“You try to do things that can reduce the value of what you’ve given,” he said.
According to county property records, the Clintons split their ownership of the house into separate 50 percent shares, and then placed those shares into trusts.
That maneuver has multiple potential benefits, starting with the fact that any appreciation in the house’s value will now happen outside the estate.
Additionally, using IRS interest rates, they can assume a discounted value for the house. Splitting the property into 50 percent shares also allows a valuation discount, because a partial interest in an indivisible house isn’t worth as much as a complete interest.
Tax Returns
It’s impossible to know what value the Clintons claimed for the house without seeing their gift-tax return. They last released tax returns during Hillary Clinton’s presidential campaign.
They bought the house for $1.7 million in 1999. Its estimated value for local property tax purposes is $1.8 million. Their house in Washington is valued at $5 million for local tax purposes.