May
12

When a House Raffle Winner Should NOT Take the Grand Prize Home

By

Hello All,

Wow, it was interesting to read the many comments and different opinions on whether the winner of the House Raffle in Illinois should take the grand prize home or the cash. Here’s my take on it: If you don’t want to live in the house or keep it as a rental, but you can sell the home quickly, and not get stuck paying high property taxes, then I would say take the house. A house that you can sell for $200,000 is better than $10o,000 cash.

You will have to pay taxes on either prize, but the more valuable prize has the potential of putting more money in your pocket.  Having said that, in a house raffle, the winners usually have to come up with the tax up front. They pay it to the nonprofit, who then pays it to the IRS. And the reason for that is that if the winner does not pay the tax, the nonprofit could be liable to pay it.

It is more difficult to come up with, say 25% of a $200,000 house, that it is to come up with $25% of $100,000 cash. If the winner takes the cash, the nonprofit simply awards the winner 75% of the cash prize, and keeps the 25% for taxes. But some banks will give house raffle winners, the tax amount as a loan against the home. Well, I’m getting into tax ramifications, but taxes should be a consideration when you choose to take the cash or the home. Many house raffles in California with 2 million dollar homes, almost always award the 1 million dollar cash prize instead of the home—you can see why.

So this was fun hearing from so many of you. Have a great rest of your week.

To your success!

Diane Giraudo McDermott

 

Categories : Just the Tips

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What Others Are Saying:

“The book really does take you through the entire process. I feel like Diane holds your hand from beginning to end from qualifying the grand prize home to what happens after the drawing. I’m a homeowner and I’ve had difficulty selling my beautiful home. Now I know what it takes to sell my home in a raffle. I know exactly what type of nonprofit I need to partner with on my house raffle and what to expect. I’m excited to get started.”

-Karen L. Furguson, Homeowner in Tucson, Arizona

"Consulting with Diane by phone has been invaluable. Her knowledge on the subject of house raffles is enormous, and she has really given us a better understanding of the process as we move forward with our house raffle. She has been more than willing to take the time needed in answering all of our questions. After consulting with Diane, we feel we have a much better chance of putting together a successful house raffle and are excited about making it happen."

Chip Thompson, homeowner in Rehoboth, Delaware

"'I Sold My House in a Raffle' is an excellent example of creative marketing. The best marketers think "out of the box" and Diane shows that you can really sell your house in a raffle!"

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“What a great marketing tool! This is a hot new method to get a property sold. My clients love this idea—I already have my first raffle house lined up. I’ll use Diane’s process to get and sell more listings.”

Jack C. Rosemary – California Real Estate Broker, 26 years experience

“I attended Diane’s workshop on February 27th, and she’s got it all together. Not only does she know how to pull off a house raffle but you can tell that she was a teacher because she knows how to convey the information. She broke the process into bite-size pieces and gave us exercises to complete so we were involved. Before anyone attempts a house raffle, they should attend Diane’s workshop–there’s more to it than one could imagine.”

-Ron Thomas, Real Estate Investor for 20 years, Albuquerque, New Mexico