Posted on 09/11/2006 5:46:01 AM PDT by Rb ver. 2.0
Too bad, at least he'll make something if he sells - even if taxed. Hopefully it'll be a tidy sum.
These guys will never make a dream house that I'd like because they ain't that creative.
Lake Lure looks like a beautiful place
Had he bought the house for a dollar, yes. But since he "won" the house, it's a "gift" and therefore is taxed as regular income right now. As far as the IRS is concerned, his income for 2006 is $3 million.
No, he pays income tax on the $3,000,000 aquisition cost. If he sells it for more than 3 mil, then he will pay capital gains only on the difference.
After 10 or 12 years, I doubt HGTV really cares if the winner can keep the house or not. After all, they already got their advertising dollars, and the all important ratings for the "New Year's special", when they first introduce the new house. Not to mention the webhits they get from people trying to enter the contest (and having to endure all the advertising banners on said website).
"Last year's electric bill: $540,000. Please keep doors closed."
How can someone win any "Dream House" and expect to live in it? It will very likely be in a location that wouldn't work for the winner.
I don't rag on HGTV for this--it's fun to watch it happen, and is an "Idea House" for viewers.
I do hope they offer some tax help to any winners, though, so they don't end up harming themselves financially.
Wow - nice property! Any R&D jobs in the area? I'm in FL and have a 1000 sq ft 2/1 and pay $3100 in annual property taxes.
I shouldn't have used the term "aquisition cost"--his win is considered income and will be taxed as such.
It really is. We moved here in '99 to escape the city life (Green Acres?) and to raise our kids in a rural environment. It's the best thing we ever did.
He may not want to take the risk that the media doomsayers are right, ie that housing will plunge.
BUMP
That's a big electric bill! I was in a grocery store manager's office a while back. There was sign on the bulliten board that read:
Last month's losses to shoplifting: $19,000.
What if the contest would have been something like "win the chance to buy this home for $1?"
Then, the purchase price is $1...right?
But the Lake Lure house was something different--too extravagent to think of owning, but a beautiful one to dream on.
"If he doesn't hold on to it for two years (I think that's how long to qualify for lower capital gains taxes) he's going to pay through the nose in income taxes too. He'll pay far more in increased income taxes than it would cost to keep it for two years - and live there at the same time."
He may qualify for the one-time capital gains exemption for the sale of your primary residence.
Good question.
they oughtta see what I'm gonna build.
need to file apatent or two first though...
I wonder if that would work...I mean, then the winner is fine as long as he/she keeps the house and lives in it at least two years. In addition the builder can claim a loss too.
Wonder if Uncle Sam would have issue with that?
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