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!

Comments

  1. Thanks for breaking that down. I always wondered what the winner's burden would be.

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  2. I entered the NM home this year because of my brother's location and will prob throw a few entries at this one. Awesome party in HGTV home > sell ;)

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  3. Wow, what a great point.
    Guess I'm not entering.

    I almost love the bedroom....but something about it is off. I think the bed is too red.

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  4. Nice analysis. I would include one additional factor - you sell it after being luckly enough to win and net a nice profit towards whatever your real dream home is. I did enter this one myself as I have relatives in Needham, Boston and Cape Cod and this could be very interesting. Not sure what my husband thinks; however, the chances of winnning are so tiny, it does not seem to be an issue to bring up right now. It's nice to dream in the meantime.

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  5. Ugh - definitely no so much of a prize, eh? Funny, I LOVE the room you dislike :)

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  6. Like all contests like these there is an up and down side, like how do you afford the house, pay the taxes, pay the utilities, the upkeep etc. They should give lifetime expenses paid when you win a house.
    But that being said if I won, I wouldn't throw it out of bed.
    xo xo

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  7. I agree 1000% the prize is more like a punishment than a prize. There was recently a lottery winner type show on TLC that featured someone who was foreclosing on one of these prize houses and possibly losing her own home in the process!

    Regarding this house in MA, specifically. Our dream is to live south of Boston. But I would never live in a development or in Plymouth. It's just not cute!

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  8. Funny!
    my mom was the realitor for the HGTV Dream home in Oregon several years ago. Pretty much YES, to everything you said.. you do have about 4 years to pay the taxes if you decide to keep the home and because its a "prize" you have several years to pay on the home.
    The winners of the house in Oregon sold it for about 20% less than what the house was valued at. the thing about the dream house is it has EVERYTHING! everything down to food in the fridge! lol They couple drove away with a new Tahoe and great furniture, whitch they sold some and made a killing on (the beds, like everything else in the house are top of the line and sell for $10k EACH!!)
    I always enter!! If the home were in a great place you can always take out a home loan and pay off the taxes.. cause the house is yours, kinda free and clear!

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  9. Glad you entered - wouldn't if be great if this post gave you good luck and you won!

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  10. I always laugh when I read the comments on the HGTV blogs - it seems many people are not as thoughtful about the tax issues as you have been.

    They're saying "I should win because my house is in foreclosure, I lost my job, etcetera, etcetera."

    You'll be fine as long as you've thought it through - which it seems you have.

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  12. Everyone hears stories about the HGTV homes being sold year after year. Jeannine just confirmed why.

    Bless your heart for being so stupid that you posted a negative comment on a blog while being signed in as yourself.

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  13. I appreciate snark when it's done well (like here and here), but CJ/Rick's comment was obviously not close to being clever or funny. We're talking about interior design and home decorating here...let's try to keep things light. :)

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