How do the people on Extreme Home makeover pay the taxes on the homes built for them?

Question

So here's this seemingly helpful show that give hard up families new homes that probably are worth over a million dollars. What is this poor family to do come tax time and the government want's it's property taxes? Does ABC help them pay for it, and for how long?

Answer 1

Newsweek reports that Extreme Makeover: Home Edition, which is aired by ABC, a subsidiary of Disney, has been advising contestants to take a questionable interpretation of U.S. federal tax laws on their personal income tax returns. As a result, contestants who have been receiving hundreds of thousands of dollars worth of "makeovers" for appearing on the show have paid no taxes on their gains, even though prizes and awards are considered to be taxable income.

Endemol USA, the producer of Extreme Makeover: Home Edition, which picks cash-strapped families for a seven-day makeover of their homes, styles its 10-day contracts with the families as leases for the use of their houses, with a rental fee of $50,000. Then, according to Newsweek, Endemol pays no cash to the families but claims that the improvements left behind are the "rent" (even if worth more than $50,000) and thus should not be taxable.

Players are granted lump sums to cover tax liabilities, such as in the case of Rocket Science Laboratories, which produces Fox’s “Renovate My Family.” But such tax payments are considered income so adjustments are made to ensure that ultimately, NO tax is owed. You win a ranch and you get additional bucks to cover the taxes: now that is SWEET!

Renovations to an existing house are considered tax exempt by allowing the said property to be leased or rented to the production company for 2 weeks while the work is happening. “Extreme Makeover” employs this strategy to avoid incurring taxes for the work they do. There’s actually a tax provision that allows homes to be rented for less than 15 days a year with no tax consequences, even while improvements are made by the tenant for that time period. The voluntary improvements should be considered of no value to the owner — obviously that’s something the owners here would claim.

The players are encouraged or advised to refinance their newly refurbished house, and with the increase in equity, they will be able to pay off the additional property tax generated

Answer 2

Least they can do is pay the freakin taxes. They don't have to worry about mortgage. They got is easier than most struggling families who are paying mortgage AND taxes, and other families who can't afford either. Sometimes I wonder why provisions are so out of proportion.