What are the taxes on the hgtv dream home
Saturday, January 01, 2011
HGTV Dream Home 2011
UPDATE: The 2012 HGTV Dream Home post is now up with prize totals and tax ramifications.
I've done a piece on the HGTV Dream Home the last couple of years since we stopped by the 2009 Dream Home which was in Sonoma, CA. near my daughter's college. We went by that house again a few days ago and it looks like it's finally occupied. Like nearly all of the 14 previous Dream Homes the winner didn't take the house, but elected the cash payout instead.
They just released the info on the 2011 version, a mountain home in Stowe, VT :
Great house, as they all have been. But the thing that I find people searching the most on Google is not the house itself, but the tax liability if you win it. I'll modify something I ran last year on that issue :
Lots of inquiries from people wondering what the taxes will be like on the Dream Home. Well, the total value of the award will be considered regular income, so you can expect to pay federal taxes in the highest possible bracket - something like 39%. On an award of this size the Vermont state tax rate is something like 9.5%. Add to that the property taxes that will
be due each year on this very expensive property, and the registration and taxes on the truck, and you've got quite a nut to crack before you can consider living there. That's why there aren't any winners that I know of actually living in the houses they won. Get your calculators out, folks. According to the official rules the total prize package (house, furnishings, vehicle + $500K in cash) is worth $2,051,120. There is, however, a cash option if you choose not to take title on the house. That option is $650,000 cash for the house plus the $500,000 cash prize plus the 2011 GMC Acadia Denali - total value $1,201,120. That'll buy a lot of maple syrup and still pay all the taxes.
If this drawing goes like all but one of the previous 14, the winner will never move in. And the one guy that did take the house couldn't afford to keep it and later had to sell. It's a great marketing idea for HGTV and their sponsors, but probably not a practical house for most people.
I'll take the cash.
UPDATE: The winner has been announced - a family in Hinsdale, IL. I'm not sure why HGTV would release that information before the awards show airs on March 19th, but they did. Frankly, there's no reason to watch now.Source: holycoast.blogspot.com