In 1997, the first Home and Garden Television dream home giveaway in Jackson Hole, Wyoming generated more than 1 million entries. By 2014, that increased to 72 million. Each year the one lucky winner received an ambush-style prize announcement and participated in a televised award ceremony. When the cameras and lights went away, the winner got a big reality-check. The financial realities of winning that home forced most to exchange the dream for something far more practical.
Dream Home versus Cash Prize
Some dream-home winners never actually live in the home. The network gives its winners a choice between keeping the home or selling it with an alternate prize package. For example, in 2013, the winner could take $1 million for the home, as well as a $500,000 cash prize and a 2013 GMC Acadia Denali. The winner chose the home option, but in June 2014, listed it for sale for $2,395,000. In 2014, the alternative option was $1,050,000 for the home, $250,000 in cash and a 2015 GMC Yukon Denali.
Financial Responsibilities
If the winner accepts the home, he also assumes its full financial obligations. That includes real estate transfer taxes, deed recording charges and closing costs. The owner is also fully responsible for current and future real estate taxes, title and homeowner insurance, and any other taxes, fees and expenses related to maintaining the home. In addition, the winner is solely responsible for fees and expenses related to the vehicle. That includes taxes, registration, insurance, pickup costs, license fees and any modifications.
Tax Implications
All winners are responsible for paying federal, state and local taxes on the home, the cash prize and vehicle. HGTV supplies an Internal Revenue Service 1099 tax form for the approximate retail value of the prize. According to KeyPolicyData.com, the IRS tax bill for the 2014 dream home in Lake Tahoe, California was $764,040. The state tax bill was $229,234, which left the winner with $993,274 in taxes. By taking cash instead of the home, the total federal and state tax bill of $623,538 left the winner with a $753,462 profit.
What Past Winners Have Done
According to HGTV, most winners accept and then sell their homes. For example, winners in 2001, 2003, 2004 and 2006 all sold their homes and used the proceeds to finance other life dreams. The 2005 winner chose to move into the 6,000-square foot home in Tyler,Texas. However, annual taxes, upkeep and maintenance expenses eventually forced a foreclosure. In January 2008, the home sold for $1.43 million at auction. The 2010 dream home in Sandia Park, New Mexico was first listed for sale at $1,195,000; it eventually sold for $899,000.