Guest Author - Kate Woods
Is it fact or fiction that if you win the HGTV Dream House that it becomes a tax nightmare? Perhaps itís all an issue of perception and if you want to actually keep it or not. It is an unfortunate fact that if you win a prize it will in all likelihood be taxable by various government taxing agencies. So winning the HGTV Dream House Grand Prize Package is no different. According to the IRS prizes and awards are taxable. They define prizes and awards as amounts received primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement or as received as the result of entering a contest. So the grand prize package award from HGTV is unfortunately taxable for federal income taxes. The 2008 grand prize package is said to be worth more than 2.2 million dollars so the federal tax liability on the total package would be over $700,000. Of course there would also be real estate taxes and taxes on the prizes at other government levels.
Most of the previous winners of HGTVís Dream House grand prize packages have sold the houses. At first consideration this seems to be a colossal shame. Consider if you will the ecstasy and excitement associated with winning a spectacular new home only to find that you cannot afford to reside in it. But ask yourself, if you won the lottery and hit for 2.2 million dollars and after you paid all the taxes you could afford to buy a nice new home and a new vehicle and still have money to invest, would you believe that you were having a nightmare or living a dream come true?
I guess like everything in life, itís all a matter of perception. Myself, I think Iíll enter the contest and I wonít wake up screaming in fear if I win Iíll be too busy experiencing the joy of having a dream come true.
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