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


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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“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.”

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