What are the tax consequences, all around, for free, furnished homes?

Question

Just wondering: When someone is given one of the reality-show furnished homes, who is liable for what kind of taxes on the property and furnishings? What about Habitat for Humanity homes? If taxed, are there tax credits on the labor?

Answer 1

Those homes such as Extreme Makeover are fully taxable as ordinary income to the recipient. In the case of Extreme Makeover, the producers and sponsors give the families enough extra cash to pay the tax bill but that money is taxable income as well.

Habitat for Humanity homes are not given to the recipients; they are sold to them at zero profit. The prices are very low since all labor is donated. There is no tax consequence until the buyer sells the home.

Labor donated for HfH homes (including the required labor that the buyer provides) is not deductible by the donor of the labor but if they have any out-of-pocket expenses those are deductible as HfH is a registered charity.

HfH does have requirements on how long the buyer must live in the home, however, so people can't just get a cheap home and resell it and pocket the cash.