Can you really get a $3 million mansion for just $10? Well, sort of . . . .
There’s a really nice house for sale in Fort Lauderdale. It’s 6,000 square feet with six bedrooms, six baths, a saltwater pool and even its own theatre.
Best of all, it only costs $10!
Of course, that $10 just gets you a raffle ticket with a chance of winning. Chances are one out of 300,000. The winner gets the good news on Christmas Day or when all the tickets are sold, whichever comes first.
Of course, there’s a tax angle. (Why else would we be writing about it?)
The property taxes are $34,000 per year. The current owners say they’ll cover the first year of that expense. But you can expect the second year’s bill to come before long.
Oh, and the prize itself is “taxable income.” That means the lucky winner will owe income tax on the home’s fair market value. Assuming it really is worth $3 million, that means close to $1 million in tax! (Good thing Florida has no state income tax!)
Of course, you could always sell the place to pay the taxes and keep the rest of the cash, right? Well, we are talking south Florida real estate here. One of the hardest-hit markets in the country. Why do you think the current owners are raffling it off in the first place?
Don’t despair. There is good news. If you buy a ticket and don’t win, you can deduct the losing ticket as a gambling loss. If you itemize. And if you report gambling winnings to offset the loss. Feel better now?
We wish all of our clients faced these sorts of tricky tax problems. Unfortunately, it’s hard to “plan” for a 1-in-300,000 shot. Still, if you do win the house, at least you’ll do it with eyes wide open!