I am thinking about entering a raffle where the prize is a new luxury furnished home that they say is a $5 million prize. I don't even think a could afford a mortgage payment on the financing the income tax.
2006-08-26 17:59:09 · 8 answers · asked by Dfwteddybear 7 in Business & Finance ➔ Taxes ➔ United States
Sell the house, buy a house worth half the price and pay your taxes.
2006-08-26 18:04:28 · answer #1 · answered by midlandsharon 5 · 1⤊ 1⤋
Sell what you don't want of the furniture immediately, and keep receipts. Show them to the IRS, and report as income only what you receive, regardless of the retail price of the items. If the house is appreciating, you might want to use a section 1031 exchange for a smaller house, and "boot" (boot is cash). Use the cash to pay some or all of your taxes, and get a mortgage that you can afford on the smaller place to pay the rest. When you use a section 1031 exchange, you only pay tax on the appreciated value of the house to the extent of the cash that you get, so presumably some of the appreciation (assuming there is some) will not be taxed in that transaction.
2006-08-26 20:27:04 · answer #2 · answered by Khemosabi's Ranger 2 · 1⤊ 0⤋
If you can't afford a mortgage to cover the taxes, you can't afford the property taxes either. Sell the house, pay the taxes, and use the rest for something you can afford.
2006-08-27 06:37:49 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
If it's the Better Homes and Garden contest they have every year, they have NEVER had a winner who could afford the taxes. They had to sell the house. However, they still made a hefty profit and were able to buy a smaller house.
2006-08-26 18:06:09 · answer #4 · answered by nursesr4evr 7 · 1⤊ 0⤋
You pay with cash if you have it. If not you must take a mortgage against the property to pay the tax or obtain financing in some other form.
2006-08-26 18:05:19 · answer #5 · answered by beer234 3 · 0⤊ 1⤋
It depends on the state you are in. You may not have to pay state taxes on it. You WILL have to pay federal taxes on it. You can indeed set up a payment plan through an attorney or CPA.
2006-08-26 18:04:57 · answer #6 · answered by cyanne2ak 7 · 0⤊ 0⤋
Win the home, sell it, and then buy a smaller home and pay off the taxes. Doesn't it count on next year's?
2006-08-26 18:04:49 · answer #7 · answered by curiositycat 6 · 0⤊ 0⤋
pay with cash and get a receipt
2006-08-26 18:02:17 · answer #8 · answered by whitebuffalorider 2 · 0⤊ 1⤋