House Raffled For $100

Some lucky person will win a $400,000 home for a hundred bucks! Owner Karen Crawford says it's the real deal.

[Tom B]

How hefty is hefty in reference to the taxes?

[Steven]

Well let's see if there are any liens on the property. Probably from the bank that currently owns the mortgage on it. Then what are the property taxes owed on it. Then who is going to pay closing to have everything transferred over to the new owners and if you are the lucky one who gets the house look to pay some serious taxes to the feds for it. It will be considered a lottery winning and is subject to federal taxes. Gee federal taxes on a $400,000 house. You do the math. You will not get this house for $100. After you pay all of the fees and taxes you will pay pretty much what you could have bought it at.

If she really wanted to make a difference just donate the house outright to charity or make it a halfway house. That way it is the house that keeps on giving.

[Sue]

How much would the taxes be?

[been-there-done- that]

steven has some great points about liens, closing, and tax costs but i disagree about the end result. No way will you have to pay anywhere $400,000 for the house if you win it. You can offset quite a bit of the taxes by saving ALL of your losing lotto tickets and tickets from any other gambling losses.

[Elle]

So let me get this straight. The person who wins this home is essentially taking over the mortgage, PLUS having to pay lottery taxes? The closing will be done according to standard closing procedures, I'd imagine, without realtor fees or a down payment, so the closing costs will be low. Interesting. Depending on how much is owed on the current mortgage and what the lottery taxes are, it may or may not be a good deal for the "winner."

[Beth]

You people can't read. The house will have no mortgage since the raffle will pay it off. You win it free and clear. That's the whole point!!!
Certainly you have to pay the taxes, but taking out an equity loan (you will have 100% equity since you will have no mortgage) for the first year would pay that. Then, either move in or rent it and the rent can pay the taxes and more! I'm not sure about the "lottery winnings" being declared--you are actually buying a house, albeit at way below market value, but you may be correct. So what!? Do income averaging to spread out the winnings. You people are all whiners. You have an opportunity to get a house for $100 bucks. The closing costs and title insurance you have to pay anyway when you buy a house--BUT THE HOUSE COSTS $100--not $400,000!!! I've already entered the contest. I hope I'm laughing at you guys all the way to the bank!

[Greg]

Keep laughing when you get the tax bill. As someone who formerly worked for the IRS, you will be responsible for the Federal Taxes as this will be considered a lottery winning. It will not be based on the dollar figure you paid for your raffle ticket, it will be at what the house is assessed at. Do your research? Also if there are liens (whether from the bank or property taxes) you will have to pay that off before you can assume ownership of the house, unless the person who is running the raffle pays off the home and satisfies the lien with the bank.

I would take heed, you are going to come out of pocket a lot more than $100. Talk to a realtor or tax attorney regarding your liabilities and true closing costs.

Your laughter may just turn into tears.

Beth wrote:

You people can't read. The house will have no mortgage since the raffle will pay it off. You win it free and clear. That's the whole point!!!
Certainly you have to pay the taxes, but taking out an equity loan (you will have 100% equity since you will have no mortgage) for the first year would pay that. Then, either move in or rent it and the rent can pay the taxes and more! I'm not sure about the "lottery winnings" being declared--you are actually buying a house, albeit at way below market value, but you may be correct. So what!? Do income averaging to spread out the winnings. You people are all whiners. You have an opportunity to get a house for $100 bucks. The closing costs and title insurance you have to pay anyway when you buy a house--BUT THE HOUSE COSTS $100--not $400,000!!! I've already entered the contest. I hope I'm laughing at you guys all the way to the bank!

[Phyllis]

OK, you guys are bringing me down. I just bought my ticket and now from the prior IRS guru (Greg) whom I am totally inclined to believe, writes I guess I am once again at a loss. I knew there wasn't a mistake when the news anchor stated boldly that the winner must pay some "hefty" taxes!!! Oh well live and learn and hopefully get a crack at the 2nd prize. The car taxes I can handle!!!
Good luck to you Beth, I hope you do come through as a winner none the less!!!

[The listener]

Once again, You Have 100% equity in the home....So lets just say worst case scenario which will never happen you get taxed on 400k, at 50%...that means that you owe 200k to uncle Sam....You have 100% equity !!!! You can take a loan for 200k and your mortgage would be about 1K a month...or you could sell it for let’s say 275K and walk with 75k.... bottom line is that you can’t loose if you win….. a 400k home for 100 is a no- brainer no matter what way you think about it…. BTW you’ll never get taxed at 400k “market value” maybe…. 200k depending on the area.

[Steven]

The reason why she is raffling it off is b/c she couldn't sell it and in this market, why would you take on a house (taxes and fees associated with it) with the housing market the way it is.

The 100% equity argument is only valid if you can secure a loan on the home and in today's mortgage market it is much easier said that done. Again the point is that you are going to come out of pocket a lot more than $100.

The listener wrote:

Once again, You Have 100% equity in the home....So lets just say worst case scenario which will never happen you get taxed on 400k, at 50%...that means that you owe 200k to uncle Sam....You have 100% equity !!!! You can take a loan for 200k and your mortgage would be about 1K a month...or you could sell it for let’s say 275K and walk with 75k.... bottom line is that you can’t loose if you win….. a 400k home for 100 is a no- brainer no matter what way you think about it…. BTW you’ll never get taxed at 400k “market value” maybe…. 200k depending on the area.

[Bruce Anderson]

Jeff,

Here is an update to the house raffle story...

http://www.herald-mail.com/...

Bruce

[Barbara McCoy]

Where do you get the raffle for the house

[June Shell]

I would feel very blessed to win a house for 100.00 that values at 400,000. So what if you have to pay for anything else. It's still got to amount no where near 400,000. I would feel honored to win this home. June Shell Hendersonville, N.C.