Posted on 09/11/2006 5:46:01 AM PDT by Rb ver. 2.0
If the contest states a choice between the prize or cash, I’ll enter - but I’d never get the new car sold before the tax man came calling - which is at the time of title transfer.
Actually, he would pay taxes on the contest winnings--$3M. This would become his basis in the house and there would be no capital gains to be taxes if he sells soon. The two year residential rule will not help him here.
As soon as we satisfy the debt and quit spending what we don't have.
I'd be happy with a revenue-neutral consumption tax for now.
It was my understanding that with the "dream house" give away came cash to pay the initial gift taxes. At least they did do this in the past give aways.
To my recollection no one who has won the dream home has ever been able to afford to keep it.
Sell it, pay taxes and get what you want, where you want for the price you can live with.
We are dealing with the income tax not the gift tax since this is a contest not a gift.
My guess would be that any taxes paid on behalf of the contest winner would also be taxable.
In any case, the winners basis is going to be equal to the fair market value of the prize on which the tax is paid.
(No more Olmert! No more Kadima! No more Oslo! )
(No more Olmert! No more Kadima! No more Oslo! )
(No more Olmert! No more Kadima! No more Oslo! )
He'll be liable for fair market value on the house and property as gross income unless he immediately puts the house up for sale so as to demonstrate intent to sell. Should he sell it for less than fair market value, he should be able to declare a loss for the difference, but will have to pay tax on the gross proceeds of the sale price. If he fails to demonstrate immediate intent to sell and takes up residence, he'll be liable for the full fair market value of the house as gross income.
He's liable in any case not only for federal income, but state income tax as well. Furthermore, there are the property tax liabilty that will need to be addressed. When that chunk of change will be required to be paid I haven't a clue.
Or he can assign the house & property to a tax excempt charitable organization or government unit. He may be able to work out a time share deal with the tax exempt charity concerning residency. A local church may be sufficient in this regard.
(No more Olmert! No more Kadima! No more Oslo! )
In response to the Tyler Tx dream home, the winners of the home are still living happily in the home. They may or may not sell the home. As for someone just staying in a dreamhome that they have just won, for a weekend, or a couple of weeks, it isn't so easy. You HAVE to have ownership of home AND INSURANCE on the home before you can spend ONE night in the home. The winner of the Lake Lure home sold that home soon after winning. Please lets get facts straight before we post, as some of these winners read these boards, even the winner of the Tyler Tx home posts on the HGTV dream home message board quite frequently..Don Cruz and Shelly Cruz. Other winners have posted messages there also.
Sorry if I misposted. All the local news reporting here near Tyler must have gotten it wrong. I hope the folks live happily ever after in the home. The guy was unemployed and on disability before the win, I am pleased to hear things are better for him.
It wasn’t just the homeowners association. He actually didn’t own the land his house was on. He only had a 30 year lease of it and was therefore subject to the owners decisions. I enter this contest every year but can’t figure out why they do stuff like this.
The man who tried to live in his, took out so much in loans to cover taxes and was broke from just trying to live there that he is hoping to just break even. The heating and electric bills are through the roof. Homeowners insurance, insurance on the vehicle, taxes on everything, plus just trying to survive. He ate through his 250,000 winnings and still had to take out a 1,000,000 loan. Regardless of the taxation of the income, you are better off to sell unless you are well off to begin with. Hire a good tax attorney to guide your every move.
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