The guy who won in this year's Home and Garden Television Deam House Sweepstakes now owes $631,000 in federal income taxes and $32,000 in local property taxes.
On the other hand, the folks who get their house rebuilt or a free house on the various make-over TV shows (such as Extreme Makeover: Home Edition) do not have to pay federal incomes taxes on their windfalls. This is because of a quirk in the tax code that allows you to rent out your home for fewer than 15 days each years tax free. The TV shows merely sets the rental price that they pay for 15 days use of the property equal to the value of the improvements that they leave behind. That's why when they say they "have to finish in 10 days" it means they really do have to finish by a certain date. The home owner is still responsible for any increase in local property taxes, which probably doubles.
Monday, June 27, 2005
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