Since 1997, HGTV has made viewers’ lives by giving away their annual Dream Home—a picturesque retreat most people can only dream of owning. And this year’s grand prize was no exception: A 3,500-square-foot home on the waterfront in Gig Harbor, Washington, the four-bed, three-bath beauty came with a Honda Accord and $250,000 from Quicken Loans. But as previous Dream Home winners have discovered, scoring the grand prize doesn’t mean you’re set for a carefree lifetime of fun in the sun. In fact, winning comes with some significant complications.
Country Living reports that of the lucky 21 people who’ve won Dream Homes over the years, only six have actually lived in their home for more than a year. (That’s about 28 percent.) Instead, the majority of winners either took the cash alternative, or made a deal to sell the house back to the developer within a year of winning.
According to an analysis by Vocativ in 2016, winning the grand prize comes with a federal income-tax bill of about $700,000, as well as state income and real estate taxes. That’s why many winners choose the cash alternative. However, that carries a federal tax liability closer to $500,000.
Don Cruz, the winner of the 2005 Dream Home, moved down to Tyler, Texas from Illinois to enjoy his new property. Along with his wife and son, they planned on turning the home into a bed and breakfast, according to The Balance. But that proved to be a challenge thanks to zoning restrictions, as well as their need to take out money against the home to pay for Don’s father’s cancer treatment. The home ended up going into foreclosure, and Don owed $430,000 in debt. Still, he continues to enter to win every single year, and tells The Balance that the experience was definitely worth it.
All it took was a meeting with a financial advisor to discover that taking the cash was a “no-brainer.”
Of the four winners in 2017, three of them chose to go with the cash prize. A winner named David Rennie said all it took was a meeting with his financial advisor to discover that taking the cash was a “no-brainer.” Rennie and his family used their winnings to remodel their current home, with plenty of nods of design inspiration from the Dream Home. Other winners, like teacher Stacy Bolder, have taken the cash from her Smart Home Grand Prize to invest in retirement accounts, pay off debts, purchase homes in their chosen location, and to create college funds for their children.
“When I won I knew, regardless of whether I kept the house or not, I was so grateful because this is a life-changing event for myself and family,” says Bolder, who did keep the Mercedes Benz SUV that came with her prize. “Being a teacher, I wasn’t raking in the dough. To be in position where retirement, at some point, actually looks feasible is incredible.”
Read more over on Country Living.