They actually sold enough tickets to hold the raffle, 5000 for $100 each. I have been giving this a lot of thought to imagine the pitfalls and the biggest is the income tax on the prize. The home in this raffle is appraised at $390,000 according to the story.
An accounting firm did an analysis for The (Hagerstown) Herald-Mail and said the new homeowner could face taxes of more than $150,000. The owner could deal with the tax load by getting a home equity loan worth $150,000, an accountant told the paper.
A loan for 38% of the value should be easy to get in most any case I would assume. They sold enough and maybe even more of the $100 tickets to equal $500,000. At the end of the story you see that it says that the charity bought the house for the appraised amount. The charity has the organizational makeup to work on the ins and outs of this better than an individual.
I assume, which is always dangerous, that they made a deal with the owners to buy the house on a contingency which was selling enough tickets. They take that money, buy the house, take possession and then give it to the winner. Win-win.
I think an individual would have a harder time. You would need to take the money, receipt it, hold it and then if you didn’t sell enough tickets, return it. You would need a lawyer to run it and most likely an accountant (or firm) to do the drawing to keep it honest just like they do with the Oscars.
Tonight there is a Powerball drawing for $230,000,000. Odds are 1 in 146,000,000 for a $1 ticket. Would you pay $100 to be 1 in 3,000 for a $250,000 home? Or 1 in 5000 for a $390,000 home? Don’t be surprised if you see a raffle in the Portland area in the next month. Maybe I will be the guinea pig.
18 thoughts on “This Home Raffle Did Work”
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Here’s more info on the ins and outs of the house raffle:
http://www.dolanmedia.com/view.cfm?recID=349641
I was lucky enough to win a house last summer. I ‘d like to do it again.
I would love to ask you some questions about the raffle you won. Drop me an email if you would be willing to do that.
[email protected]
I was looking into this to sell a house I own in Michigan. We’ve been trying to sell this home for several years. It is 4600 square fee with 500 feet of frontage on Lake Michigan. I called our attorney generals office and they said to call the Bureau of Lottery. I was told this is illegal in Michigan. Only non-profits can do raffles-not individuals. Check your state for legality issues.
Absolutely. The more I look at this I feel the ONLY way to do it is through a charity. It gives others confidence that it is on the up and up as well you would have the organizational skills they wield.
My understanding is that a private party conducting a raffle for profit is a C felony, punishable by up to 5 years in jail. . .
I encourage anyone interested in raffling a home or buying a raffle ticket for a home to check out http://www.USAHomeRaffle.com
A loan for 38% of the value should be easy to get in most any case I would assume. They sold enough and maybe even more of the $100 tickets to equal $500,000. ——————— wow… nice figures here…
If you would like to raffle your home, I encourage you to visit Raffle Mansion. Our team will assist with your home raffle to ensure all you comply with all legal requirements. We can also help get a non-profit organization to sponsor your event. For more info visit: http://www.rafflemansion.com
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why would there be tax, when a person wins a winning ticket? because it is like winning the lottery?I am checking into this!!
The government wants to tax you for any money or gain you get.
so if my house is now apparised at 300,000 and I sold 2000 tickets for $200 a piece paid off my mortgage and had some left would I have to pay taxes on that as well as the winner paying taxes on the appaised value of the house?I am really interested and I have been checking to see the legality of this but I need more info, I have a 501(c) 3 religious non-profit corp, can I run it a raffel through that?If you do not know is there somewhere I can get the info from?
Because there are many legal factors your best option would be to talk to a lawyer.One issue is what happens if you only sell 1750 ticket?.Another is who holds the money?And the big one is who picks the ticket? You or a lawyer?Also some states don't allow raffles but they may allow essay contests.A lawyer is your best bet but there would be upfront costs which I thinkis the reason that non-profits don't jump on this idea more fervently.- Mike Rohrig
Looking for a non profit to help us raffle off our villa, this is not a timeshare,,We own it out right,it is located on the island of Grenda {West Indies}.Looking for help,have no clue on hoe to do this. Regards. Robert
Just another way to take more away from the common man. Yes, it may work. But the common man has no legal rights or freedom to conduct the raffle himself. I understand the intricacies associated with the raffle, but why is it that you or I cannot do this ourselves. Why is there always an institution waiting to profit from it at your expense. In some of these cases, the agency walks away with 100s of thousands of dollars.Its the capitalistic model. You may sell your house, but someone other than you profits greater from your assets and hard work.The system wasn't designed for us, it was designed to take from us. And once again, you are thwarted from basic freedoms of choice in this country by your government.Continue to feed the money hungry monster, and it will grow stronger.I resent this whole idea. But good luck anyway.
To avoid the income tax problem they just have to give the winner life tenancy. This means the nonprofit will get the house back when the winner dies. If the winner sells the house while he is the tenant he will only owe a capital gains tax, unless the state where the house is located allows for a one-time primary residence exemption.
To avoid the income tax problem they just have to give the winner life tenancy. This means the nonprofit will get the house back when the winner dies. If the winner sells the house while he is the tenant he will only owe a capital gains tax, unless the state where the house is located allows for a one-time primary residence exemption.