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never mind

This message has been edited. Last edited by: Vinnie dabomb,

Here is some information posted by TangoW, perhaps it might shed some light on some of the costs of taking possession of the home vs the cash option. Estinated tax, insurance etc.

"the dwelling and land, furnishings are HGTV LISTED as ARV $1.7 million.

: Here are some estimates, an endeavor that is perhaps like a George Costanza guess...
Kiawah land alone costs about $1 Mil an acre; or, $250K for this property.
The furnishings are likely $175,000 for the 3000 sq feet. Linda?
House alone, thus, is likely to be appraised at 1,250,000?

To accept the DH home and the car, I think this would be required:
Fed taxes...$892K; 39.6% new income tax rate is used here.
S. Carolina state taxes..$155K (includes $2800 S.C. offset) using their 7% tax rate.
Subtract $500K cash (from prize): $547K in the hole on Apr 15, 2014, to be made up using a loan against the property*.
In view of all this, you now accept the Sweepstakes Dream Home and GMC and $500K. Happy, happy.
You move to the sight at Kiawah.
Property tax is about $915 a month on $1.4 Mil on a Charleston County dwelling and land;
HOA is $200 a month;
Insurance on the dwelling value, near $1250 a month in this coastal area.
Utilities incl elec, TV, internet, phones estimated at $350 a month. That is very low ball.
*A $3400 a month mortgage loan ($547k) taken out against the dwelling/land @ 4%
*(if you qualify?---income should be 4X the total housing cost---)
One might be required to have mortgage insurance added to the loan payments."

These look like some good estimates. A person could have a wonderful dream either cash option or moving in.

Thanks Vinnie, I like your calculations better. You are correct that different portions of your income are taxed at different percentage levels. I should not have assumed with just the answers and not the calculation that it is correct as Tango had it all been figured at the higher tax amount.

Property tax and other information was also listed, perhaps that should be researched as well.I do know the HOA amount is correct as read that on the website where the home is built.
One must also consider the amount of other income that has been earned. That is why i would see my accountant should I win.

"If Grand Prize Winner elects to take the Cash Option, the Grand Prize winner will still receive the Cash Prize and the GMC Prize."

Vinnie, you need to read what you're posting! You either get the house with furniture or you get a million bucks. Either way you still get the car and the 500 grand. Also, if you take the house you may not need to pay SC income tax if you live elsewhere, but some states require non residents to pay on what they made in the state. Either way, you'd need a CPA and no decent CPA would have their client pay taxes on a stipulated value rather than fair market value. In other words, the sticker price on the car is what is being stipulated as the tax basis, but nobody pays full MSRP on that car so you'd only pay taxes on what is a normal selling price for that vehicle. The same holds true for establishing the tax basis for the house and the furniture. How much did I save you now?

There are many ways to look at it, but i know HGTV sends a 1099 which also goes to he IRS as well with what they set the value. But I suppose one could get a reassessment.

I do believe Vinnie understood that the cash option is the cash payment plus car as we have looked at this several times. It can become very complicated as many lok at the facts.
Good to see you.

quote:

Originally posted by Chuck Steak:
"If Grand Prize Winner elects to take the Cash Option, the Grand Prize winner will still receive the Cash Prize and the GMC Prize."

Vinnie, you need to read what you're posting! You either get the house with furniture or you get a million bucks. Either way you still get the car and the 500 grand. Either way, you'd need a CPA and no decent CPA would have their client pay taxes on a stipulated value. How much did I save you now?

Now Now Chuck....I did start with "I am no accountant, and what my point was is that the tax should be much lower then the 1,047,000.00 that ski said it would be.

on the other part: I apologize...I missed one small word that make the world of differance

This message has been edited. Last edited by: Vinnie dabomb,

Hey Vinnie, it is what we mean, not what we say . I guess whoever wins will know when they receive that 1099, then you have to add that to your present income.

Fed tax and state tax all have formulas and we can't avoid paying what we owe. But all those finances do nothing to take from my enjoying the dream.

I am back to enjoying the view

I looked at a real estate site and found that homes in Indigo Park are being priced from 1.7M to 2.5M. Does anyone know how many homes have actually been built? Since income taxes would not be due until April 2014, I would think you could come out ahead by taking possession of the home and selling prior to taxes being due. If the market value of the home and furnishings is 2M, you should be able to net around 1.88M on a sale after real estate commission. Even after the costs of real estate taxes, insurance, HOA dues, transfer of ownership costs, utilities etc., you should be able to net more cash than taking the cash option. The variable is being able to sell the home at the specified price before income taxes are due. If you take ownership you are able to enjoy the home until you sell. What do you think?

I think assuming you could sell before April 2014 is a very dangerous game given the current real estate market. Many people wind up stuck with property that doesn't sell...

The value of something won as a prize would be the amount it is valued at possession and i am sure there would be a certain amount of time one would have to make a decision on that, but one could get another appraisal, but it could then be a higher amount if property has increased in value.

Vinnie, Nurse Judy, this is Confused Phil here. ...lol. I thought you got the million dollars if you took the cash route instead of the home. But now after reading the sweepstakes again and ya'lls comments I've confused even more. It READS as if you get the million dollars plus the 500K if you choose the cash route. What is confusing me, is it says Cash Option and Cash Prize in a couple sentences as if indicating two different things. Which one is correct? I hope this doesn't confuse ya'll as well.

Phil #33

PS. I must be deciding soon as my winnings are nearly here...........Good Luck ya'll.

Phil, as Chuck Steak stated, the winner can accept the all-cash prize, or, can accept the home/smaller cash. All receive the GMC.

This prize has been the subject of MB taxes' remarks since the beginning. CPA was with us for a couple of years...but absent again this year. You would need a CPA of your own, anyway.

I am recalling some of CPA's remarks...he had other stuff, so search the archives...

Definition of Sweepstakes:
It is not a Lottery. The IRS does not take any taxes' prepayment of the prize when you win it.
The Prize, either home/cash/GMC, or the all-cash, is a SWEEPSTAKES, all of which is defined by IRS code which is considered as pure income, with no separate Tax Schedule applied to your total fed and a state income tax Returns.
This prize is not, has not a type of capital gain of any kind. i.e. One cannot apply any real estate gain or capital gain or loss to it.
The prize cannot be divided up into succeeding years, even though other income might be allowed to be divided up on your Return.
The value of the prize is established through MSRP (and cash) when Sweepstakes begins.
Either of the prizes the winner chooses meets top income tax rates; for fed it likely is 39.6%, due Apr 15, 2014.
This total value of the sweepstakes is what goes on the winner's form 1099. This ARV may not seem fair. Argue with the IRS if you wish about it; prepare for litigation on any downward adjustments; precedent has been set on these sweepstakes. One enters the contest with ARV knowledge.
The prize, (not all your income, just the sweepstakes income) is a possible fight-between-states event, but since the prize is income in S.C., you will likely pay their 7% on the prize.
Your state surely has agreements with other states regarding rules on these matters. A lawyer who knows state tax will be necessary.
HGTV has been very helpful in these matters, and many others i.e. LLC, Deed info. This is a great opportunity.
---respectfully submitted,
shoeshine boy

I'll take the $1 million cash, the $500,000 cash, the Acadia, and enjoy the weekend visit to the home!


(The winner still gets to visit the home even if they take the cash, correct?)

It can be confusing Phil especially after we read many interpretations others make here. I just carefully reread the options in the rules before responding.

the "Cash Option"). If Grand Prize Winner elects to take the Cash Option, the Grand Prize winner will still receive the Cash Prize and the GMC Prize. If the Grand Prize Winner cannot take possession of the HGTV Dream Home due to a force majeure event, failure of constructions, or any other reason as determined by Sponsor in its sole discretion, Grand Prize Winner shall receive the Cash Option, Cash Prize, and the GMC Prize. Total ARV of Grand Prize is $2,253,565 if Grand Prize Winner takes title to the HGTV Dream Home or $1,553,565 if Grand Prize Winner selects the Cash Option.
Options:
1) You receive the house, the furnishings, $500,000 in cash and the GMC

or

2)in leui of above, you can choose the cash option which is a total of $1,000,000 cash plus it appears the $500,000 plus the GMC because the cash prize is $1,553,565.

Is that what you all see as well.



Either way, all sweepstakes winnings of any type are considering taxable income for a winner as mentioned by Tango. Fed tax is calculated at different levels. A certain amount of higher income is based on the highest tax rate, then the remainder is taxed at a lower level.

State tax is calculated in the state it was earned,(have had experience with earnings in two states the same year) but one would have to also file this income with the state they are living in but the amount paid to another state is taken into consideration by the state you live in, so you are not state taxed on the entire amount in both states, but a portion.

Either way. it would be a dream come true for a winner.

Two more days to enter, and then is BOLO for HGTV at the lucky winners home.

What a Dream

This message has been edited. Last edited by: nursejudy,

One more day good luck to everyone

The deer is waiting to scope out the winner.

Did my final entry........now it's up to the luck of the draw Gods. Still a fantastic dream.

MY DH and i put in our final entries as well. Now is the time for the big dreaming to commense. BOLO for HGTV driving the GMC through the neighborhood.

Is it white ? because i saw one this evening early just sitting t the top of my street. It was kinda odd.

It could be any color

Those GMC Acadias are EVERYWHERE!
I saw one at a local eatery with a magnetic sign on it for the dealer. A scout car, I doubt it now.
All they have to do is slap a couple of stickers on a demo car to show the winner, then the winner gets to choose color etc later.
Ever noticed how much you notice all the cars like the one you have, same effect.
Good Luck dreamers, we will need it!