HGTV Builds a You a Dream House… And then you Wake up.
October 10th, 2006
Ever since I saw the episode of the popular Dream House television program where the crew built a brand new dreamhouse for a disabled woman, living with HIV, who had also infected her two daughters, all of whom lived in one of the worst neighborhoods in (if I recall correctly) Southern California, I’ve wondered what they do for those people regarding their new property taxes.
I understand there is some kind of cash prize that goes along with being on the show, but for a woman who probably has enough stigmas attached to her that no one will hire her at a Denny’s, I can’t imagine it will last long.
The house was huge, at least 3000 sq. ft., with a pool and rock waterfall in the backyard. This was built in a neighborhood where the next more comparable property is a 3 bedroom, no bath crack house with 3.67 walls. The more likely neighbor was a single-wide trailer on cement blocks.
Despite the fact that they pay off the mortgage, the property tax assessment on a mansion is not something people think about, nor is it something everyone can pay.
When I worked in real estate in Tucson, I was astounded by some of the assessments people needed to pay. Some of the nicer, 6000 sq. ft. foothills mansions had tax bills higher than $20,000 due every year. Tell me someone in South Hell, California can afford that (let alone what that would cost in California taxes!).
I just read an article which brought to my attention something I hadn’t considered at the time: taxes on your winnings. Think about going to a casino. If you win big, the casino reports that gain to the IRS, who want their cut. Your winnings are cut nearly in half by the taxes you pay. Not such a big deal when you win a liquid (cash) asset.
However, now you’ve just been on a television show that gave you a 3 million dollar house and $250,000 in cash. Guess what? Uncle Sam still wants his cut of that $3,250,000 in assets.
So apparently the winners on these shows end up taking out mortgages on their new property to pay the tax bill, a particularly ironic (and cruel) twist considering that the end of every show usually ends with the host announcing they’ve paid the homeowner’s loan, and they can now tear up the mortgage document.
If you want to read a (probably sensationalized) story about this, you can check it out here:
http://money.aol.com/cnnmoney/realestate/canvas3/_a/the-house-that-swallowed-don-and-shelly/20060627161909990001
Entry Filed under: Finance Concepts, Finance Examples, Home Mortgages Articles
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