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Readers Respond: How Would You Pay the Taxes on the HGTV Dream Home?

Responses: 339

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AN ANIMAL'S DREAM

If I am lucky enough to win this dream home I would have more than one dream come true, first would be the dream I've always had is to start a home for lost and unwanted animals, the other would be to own my own home, for the taxes, ins & all other costs, I would hope to get a grant or something to pay them with, both our retirements & SS I think we could pay everything, we would have to tighten the belt about 20 inches but for the animals I wouldn't care. We now have 12 dogs & 8 cats to take care of, but for the happenness they bring to us it's worth the work & epense & you know something, when things come up & we get short on money something always happens money comes from somewhere, HAVE FAITH GOD ALWAYS PROVIDES. You just have to want it badly enough & be willing to work for it. GOOD LUCK, I HOPE ALL OUR DREAMS WILL COME TRUE. But as the saying goes be careful what you wish for....
—Guest Dorty

Power of Positive Thinking

I have read and re read all the comments and I do agree that taxes LOOM LARGE over this prize and it appears that is all that most of the bloggers are concerned about. Why enter a contest and then decide that you won't get to keep it and keep throwing one negative comment about it after another. All information is not in yet. GET and STAY POSITIVE. I am believing that when I win, all the necessary monies I will need to maintain this GIFT will come to pass and I won't have any problems keeping the prize that I entered to win in the first place. I want to win and keep this Dream Home and I believe that it IS POSSIBLE. NO! I am not a millionaire. I am retired. As I stated in a previous blog I DO believe in miracles because I have seen them happen. Open your minds to new opportunities for exceedingly over and above abundance in your life not only in this contest but in every area of your life. Believe IT & Receive IT! Good Luck to all who entered the 2010 Dream House.
—Guest Janet

Bring it on

Unfortunately taxes are a fact of life but I do want to keep the DH after winning it. I want to start a new beginning in NM. I do believe that winning would truly be a God send and I believe that He will help find a way to be able to maintain this Home. I am praying, hoping, and dreaming about winning. I am remaining Positive about it. I refuse to worry about something before I have something to worry about. Use that energy to figure something out. Expect a Miracle because Miracles DO happen. I believe that if something is for me it will come my way in the form of the whole package. I really just found out out the HGTV Dream Home Sweepstakes and this is the first one I have entered so maybe I have novice reality but I believe that all things are possible through Faith. I don't know exactly how this package will be taxed, separately or all together, but we do know it will be taxed and we all knew that before we entered the sweepstakes so please don't put a sour note on a possiblity.
—Guest Janet

Dream Weaver

I can't imagine how many dreams have been entered in the HGTV sweepstakes, and mine is just one of them. Good luck to all who are trying to make their dreams come true. As for all the details regarding taxes, etc. I believe if you were meant to win, you'll figure all that out. What a great opportunity for all of us. Thanks HGTV, I love watching all your programs and will continue. Love all the information on remodeling, first time homebuyer, and Holms on Homes. At least the HGTV dreamhouse is one house Mike will never have to fix up.
—charmelprice

God is good

I live in an area of Kansas that is high cost, snobby and mall/restaurant/SUV city. 7th richest county in the nation. I, sadly am not one of them and have dealt with nothing but prejudice because of my income, having 3 special needs children (autism), etc. If I won the house, God has a plan. I gotta admit, it wouldnt be the best place for my autistic daughter. She'd be throwing those sculptures through the window. But, to live somewhere that, I could look out at that view every day, know my children finally had a home that doesn't require a bulldozer for repairs, and to get out of this snobby area--God is in control, even though the IRS thinks they are. lol. Blessings to everyone.
—Guest Kelly

Does anyone know the answer?

I think that winning the house would be wonderful. Stay there for a while and then put it up for sale. My question is this: So you are able to pay all your taxes that you owe on your prize winnings, but now do you owe additional capital gains tax for having sold your house???? Just curious...
—Guest maineanchor

If you have income while living there...

I don't understand - most of the responses sound like the people don't plan on working or having an income... This isn't a 100 million dollar lotto... I would use the $500k to pay taxes and whatever balance of taxes are owed just take a mortgage on the home - interest rates are low right now and a $300k fixed rate mortgage over 30 - even 40 years is not an outrageous payment. I don't think the sq footage was going to cause the monthly utilities to break the bank - there are only 3 bedrooms other than the casita, which only heat if moms comin - my brother lives in Rio Rancho in a 3800 sq ft house and he has 6 bedrooms. Also property taxes in NM are some of the most reasonable in the country - trust me I live in NJ. So if you and your spouse have jobs and steady income it's not an outrageous thought to keep it. I hear it is a pretty isolated community - 40 min drive from SAF - 45 from ABQ. Great golfing in the area and sking - but if you're looking for a "town" not much to offer.
—Guest I Entered from NJ

winning the home

The house is in a private community that has stiff rules governed by their association. You cannot use this as rental or business. If you decide not to live in the house and just vacation, you will need to hire someone to maintain your land and appearance. Strict community and if you want to sell it, don't think it will be a fast sell. There are several million dollar homes for sale in that subdivision and they have been on the market for over a year. Use the 500,00 towards your taxes and then take out a mortgage on the home for the remaining taxes, approximately 250,000. I don't see why people can't keep the house and end up selling it. Maybe the winners are more like myself and can't get a 250,000 home loan due to income levels. New Mexico is beautiful, the subdivision is beautiful, whoever wins it should stay in the house. You won't be sorry you kept it.
—Guest Marie

Pitfalls?

After reading many of the responses there seems to be a common theme of turning this dream home into income producing property. This may present a problem as it is located in a "gated" community that may have rules governing number of occupants, rental property, etc. Winning this home would definately require the advice of a learned attorney in such matters. Perhaps a lot of the information would be provided to you by HGTV upon winning? Hopefully to whoever wins there are answers to all these tax and other issues. Good luck everyone!!
—Guest Sharon Blanding

Reality

As much as I would love to live in this home if I were to win, I am realistic enough to know that I could not afford the prize taxes (federal, state, and local). As for the folks who think they can pay those taxes with the cash prize and keep the vehicle, please keep in mind that you also have to pay taxes on BOTH the $500,000 AND the vehicle. So the total tax amount owed would be over $800,000 (not to mention paying a realtor their percentage for the sale). Good luck to everyone (including me), but some people who are posting on here need to do a Google search on paying taxes on prizes (including taxes on the $500,000 and the vehicle). However, even after all is said and done, the winner will still come out ahead with $600,000-$700,000. And the reason HGTV calls it a "Dream" Home (if you listen to their ads), has more to do with having the ability of making dreams come true - the house is just the "vehicle" to make that happen.
—Guest DeeDee

Reverse Mtg and equity loan: not so much

Although interesting ideas by definition, the reality is that reverse mortgages have age and $ amount restrictions. Equity loans are actually based on the income of the borrower, and the equity of the house is only used as collateral. So if you are the average Joe winning, regardless of the value of the home in equity, if you only make 50K a year, you are not getting a loan large enough to pay the taxes. Remember- equity is not gaurenteed-Just ask us down here in Port St. Lucie Fl where our houses are worth only 1/3 what we paid for them...
—Guest Molecular Me

New Mexico Dreamin

It would be wonderful just to win the home and car. The money prize would go to help pay the taxes on it. But I think the family would like to enjoy it for some great vacations. Although I could see myself living in it for a few years too.
—RedSpirit

Sell It

We would definitely take the advice, seek advise from a professional accountant and sell it. We would use the proceeds to purchase a home, pay off debt and retire from our job.
—Guest Berrymorin

Using the property for a business

You cannot use the property for a bed and breakfast. That is in the contract. You either have to live in it, or sell it. One winner wanted to used the dock house as a rental property, this was the Plano, Texas home, and was told that he could not do that because of the way the land ownership is. The land that the house is on is leased on a long term contract, with an option for renewal. Best case scenario: Sell the house, pay the taxes and buy something more reasonably priced.
—Guest BamaFan

the reality of the taxes

According to the State of New Mexico...All property, whether real or personal, is subject to state and local property taxes. Rates vary substantially and depend on property type and location. The statewide weighted average rates, i.e., total obligations/total net taxable value, are about $26.47 for residential property. Assessors usually determine market value by the sales-comparison approach which matches a property's value to that of similar properties. The valuation of a residence that did not change hands in the prior year may not increase by more than 3% annually. One-third of the property's market value (assessment) is its taxable value. The taxable value may be further reduced by exemptions of $2,000 each of heads of house holds and $4,000 for veterans. SO...1/3 of the value would make the annual taxes $17,646.67. That's like making a $1,470.55 a month mortgage payment - totally do-able! Just invest the majority of the $500k and you should have no problem!
—Guest Suzanne

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