So If I pay 100 bucks and win the house is it not correct that I will owe federal taxes on the difference between the 100 bucks and the current asking price of 390,000, or in my bracket 35% of 389,900 or a little over $135,000 to the IRS.
Then there are the state taxes.
If you sold it immediately any gains would be taxed at ordinary gains. Otherwise you would have to live there to get the single exclusion ($250,000) or married ($500,000)
If you win you better have the ability to write a lot of large checks.
You could get a mortgage to pay the taxes. Assuming you live in the area or would like to and can afford a 30 or 15 year mortgage on $135,000 (assuming you don’t sell your current house to help pay the taxes and reduce the mortgae) this could still be a good deal. You’d have $234,900 of equity assuming the house is actually worth $389,900. Then there’s those messy property taxes to deal with also.
In short I wouldn’t enter the raffle if I didn’t want to live in that house and I’d also want to be pretty sure I could sell mine.