The condo owner, moreover, can deduct property taxes, and gets a partial exemption from capital gain taxes when he moves, notes James Banahan, a credit analyst with National Cooperative Bank in New York.
At the death of the first spouse a chunk of his or her assets--equal to the exemption amount--would go into a "bypass" or "credit shelter" trust, with the rest going directly to the surviving spouse, who can inherit an unlimited amount free of estate tax.