HGTV 'Dream Home' proves tax nightmare

Discussion in 'Now Playing - TV Show Talk' started by DianaMo, Feb 10, 2006.

  1. DianaMo

    DianaMo Cubs fan

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    'Dream Home' proves tax nightmare

    The Associated Press
    Published February 10, 2006, 6:59 AM CST

    Read entire article at:

    http://www.chicagotribune.com/news/custom/newsroom/chi-060210dreamhome-cnd,1,2388307.story
     
  2. vertigo235

    vertigo235 Well-Known Member TCF Club

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    Oh man I feel so sorry for them!


    I wish I had these types of problems...
     
  3. jsmeeker

    jsmeeker Notable Member TCF Club

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    why would you want to owe $800,000 in taxes and have to take out a LOAN in an attempt to pay it? :confused:
     
  4. PJO1966

    PJO1966 Hi. What is this?

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    No kidding... if I won that thing it would be on the market immediately. Then I would buy something a little more manageable in an area I actually chose to live in.
     
  5. Idearat

    Idearat Active Member

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    I don't know the details about how HGTV picks or awards the Dream Home, but if it's something that 7 out of 9 people sell immediately, it's not really a dream home. It's more of a "big prize you have to do lots of paperwork and pay realtors to get your money".

    If the dream homes are usually more than the winners can even afford the taxes on then it's a shame. Maybe it would ding HGTV too much, but perhaps another option would be that instead of giving them the homes they rent them to the winners at an amount equal to the property taxes.

    Wouldn't it be nice if someone won a dream home and could actually afford to live in it?

    That said, a 5,700 sqft house wouldn't actually be my dream home, just a big house.
     
  6. Graymalkin

    Graymalkin Grumpy Poster

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    This is why I'll never enter contests or sweepstakes where a cash option isn't available.
     
  7. vertigo235

    vertigo235 Well-Known Member TCF Club

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    The solution is simple for me, sell it immediately, I don't have to get a premium for it because it's all FREE MONEY. Then I would go buy a different house, or heck, just pay for the one I have.

    Like I said, I wouldn't be upset if I had this problem.
     
  8. EchoBravo

    EchoBravo TV-MA LSV

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    I looooooooves me some HGTV.

    The show "Dream Home" has always bugged me though. They had a show called "Dream House" for a couple of seasons which was different. I always wondered who at a channel (it's not really a network) would greenlight shows with such similar names and totally different premeses.

    I can also never get past the location of the alleged dream homes. My dream home wouldn't be within 1,000 miles of Texas and probably wouldn't involve a boat slip. That show's just not for me.

    Great channel though.
     
  9. jimmymac

    jimmymac New Member

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    I enter every year even though most of them are no where I'd ever want to live. If by some miracle I ever won, I'd put the place up for sale as fast as I could because it's pretty clear that most people couldn't afford to keep the place.
     
  10. appleye1

    appleye1 Active Member

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    And A&E had a show called "House of Dreams" back in 2003. Do you remember that one? George Wendt ("Norm") was the host. Cheesy reality show, but I kind of enjoyed it. It was like "This Old House" meets "Survivor". I wish it had lasted more than one season.
     
  11. SteveInNC

    SteveInNC Active Member

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    The current home is on Lake Lure in the mountains of NC. I grew up in Asheville, which is about 30 minutes away from there. It's a beautiful area.

    http://www.exploreasheville.com/

    If you ever saw Last of the Mohicans, that was filmed right around and in the area. Asheville is also where the Biltmore House is located.

    http://www.biltmore.com/

    I remember hearing that for the prize this year, a loan company (sponsor) is throwing in some cash to help defray the taxes.

    Like many of you, I'd be inclined to sell immediately and put the funds to a more realistic use. A 5000+ square foot vacation home is a little outside of my lifestyle :), although I'd sure stay there a week or two after winning, just because...

    re: taxes, the Feds will normally work out payment plans for people that suddenly discover that they owe too much tax. I'm not sure that carries over to something this large, but if so, the payments would probably be roughly similar to a normal mortgage. Another option would be to take out an equity loan on the home and use that to pay the taxes, then you get to deduct the interest expense as a mortgage...
     
  12. Hansky

    Hansky Active Member

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    Dirty Dancing was also filmed, in part, in and around Lake Lure.
     
  13. Martha

    Martha Member

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    We vacationed at Lake Lure this past fall - it is gorgeous! We've entered this contest multiple times. Hubby and I talked about what we would do if we won it - we're only a couple hours away from there!

    But yeah, we'd sell it too, pay off our current house, fully fund kids college, and still have plenty left over! :)
     
  14. MickeS

    MickeS Well-Known Member

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    That article is a bit confusing. Is it the property tax, or the tax for winning the house they can't afford? According to the text, it seems to be the property tax ($38k/year), but that has nothingto do with the $800k in taxes.

    These things are not hard to figure out before you enter the drawing.
     
  15. Kingfish

    Kingfish "Every man a king"

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    I wonder how people with average incomes are able to pay the property taxes, etc. and keep the Extreme Makeover home whereas the HGTV winner can't afford to. :D

    Is ABC paying the property taxes year after year for Extreme Makeover winners?
     
  16. jasong2001

    jasong2001 New Member

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    With ABC they found a loop hole in Tax law, something about not having to pay tax on rental income. Sooo..... ABC pays RENT in the amount of the total cost of the upgrades house spread out over the week (7 days) ie 50,000 a day. So the house is payment for renting the property, but the catch here is the law also says that you can't rent your property for more than market value... its a scam really and if the IRS wanted to they could go after those home owners for taxes.

    With HGTV I think you have to pay taxes on every dime you get including the LendingTree Home Loan of 200,000 so that doesn't help.. this all adds up to that 800,000 tax bill. Dream home is just a giant pain in the butt really, the only people who make out in that deal are the advertisers.
     
  17. Animgif

    Animgif Stud, Esquire

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    I'm not a tax lawyer (or a lawyer) but if that's the problem, then why don't they just rent it for X number of months/years/whatever for the total of the tax amount and pay it upfront? I have paid my rent in 6-mo installments before (yes, I know...it's bad...interest, blah), why couldn't they do that if it was actually in violation of the Code?
     
  18. Hansky

    Hansky Active Member

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    Why not say the improvements are worth $1295.00? Or transfer the home into a non-profit corporation and call it a home for battered wives? Ot a thousand other things that are also known as felonies?

    A legitimate argument under the Code as written is one thing. Avoiding taxes by outright lying tends to lead to penalties or prosecution. The IRS looks at the true substance of the situation not the label. In the case of this show, it isn't like they have to do much investigation. In the end, it is the homeowner who signs the income tax returns under penalty of perjury, and the homeowners who will pay the taxes, penalties and interest.

    In this case, the producers may not be far removed from the likes of Irwin Schiff and the other scammers out there who convince people to not pay taxes through various ridiculous arguments. They sell books, get paid for "advice," and the gullible person who falls for it loses everything and/or serves time.
     
  19. Turtleboy

    Turtleboy Well-Known Member TCF Club

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    I'm both. :D

    Rental income is income, but there is a safe harbor for renting out your princpal residence for less than 15 days in a tax year.

    Edit: Oh, and there are no "gift taxes," as mentioned in the orignal article. There is income tax.
     
  20. pmyers

    pmyers Well-Known Member

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    I agree. Obviously something is flawed with HGTV's plan if 7 out of 9 people have to sell it. ABC has come up with an answer for their show.
     

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