Wednesday, June 29, 2005
Prizes such as these do not qualify as gifts for tax purposes. Instead, they are consider income. Accordingly, Don, who is unemployed, owes over $600,000 in income taxes plus over $30,000 in property taxes.
Don wanted to raise money by converting part of the home into a bed and breakfast but local zoning laws prohibit the commercial use of the land. His attempt to obtain a variance failed.
Thus, it appears likely that Don will have to sell the home just like every other winner (except one) of this contest. Of course, the sales price should exceed what he owes and thus he should still have a substantial amount of money to buy a small dream home.
See Tyler HGTV Dream Homes Becoming Nightmares For Winner, NBC5i.com, June 23, 2005.
This just provides further evidence of the old saying, "There is no free lunch."