Is the HGTV Green Home a prize or punishment?
I never entered the HGTV Dream Home or Green Home contests in the past because I feared the tax burden that would come with the homes. On top of that, they also seemed to be in new developments and I worried about being able to sell the home once it was won.
I've heard that the development in South Carolina where the last Green Home was located wasn't the success it was planned to be. Just recently, a commenter on Young House Love said they were at the development in Tradition, SC where the 2009 Green Home was located. There were "about 8" homes in the development, all rented, and there was no one in the sales office. The appliances in the HGTV Green Home were being removed.
This year, the Green Home is just south of Boston, in Plymouth, MA. Living in Boston again would be dream. When I lived there, owning a home was pretty much out of the question. I was tempted to enter the contest to win the Green Home, but I decided to ask my financial planner* to run the numbers on the how much "winning" this home would cost.
The value of the prize is about $789,000. The tax on the prize would be 35-39% of the value, potentially as high as $307,000. If the $100,000 cash prize was put towards taxes and the car was sold for $30,000 (I took 20% off the value for depreciation), that would leave the winner with about $177,000 in taxes to pay on the "prize". I'm going to add that the property taxes will be about $7,500-$8,000 per year, based on an estimate I found on a real estate website for a comparable property nearby.
That would leave the winner with around $185,000 in taxes to pay (39% of the prize value + property tax) in the first year. This is definitely one of the more modest HGTV Green Homes (only two bedrooms), so the tax burden would have been substantially greater in past years. I figure that the only way someone would actually be able to live in the home would be if they had work in the area and had a home that could be sold to pay the taxes.
Ugh...not crazy about this room
As a former Bostonian who works in a industry that is huge in that city (there are something like 61 colleges in the Boston metro area) and has family I miss terribly there, I'm finally entering this contest for the first time. Do you think I'm crazy? Have you been entering the contest?
*By "financial advisor" I meant my father, a retired i-banker.
If you want a more manageable prize, check out the giveaway I posted yesterday!