Someone in another thread kind of touched on this, but I was wondering, do the people who get a house on Extreme Home Makover have to pay income taxes on it? You have to remember that many of these people weren’t in the best financial shape to begin with, and the income tax for receiving a really nice home can easily run upwards of a hundred grand. How about property taxes? Again, depending on where you live, you might end up having to pay close to $10,000 a year for a a really big house. Is this something the network takes care of, or is there perhaps some loophole by which they can avoid paying so much?
I read in a couple of places that they exploit a loophole in the law. They set the show up as if they’re leasing the house from the family for a couple of weeks, and oh, by the way, we made a few “improvements” while you were gone. Apparently this is exempted from tax. Google “extreme makeover taxes” and take your pick for a cite 
I think they made changes after the first year or 2 due to tax issues.
What I really want to know is how they prevent people from doing really stupid things with the huge windfall. If at all, I suppose. I read about a case where the family used some of the money that was supposed to be for mortgage (? I know nothing about mortgages or paying for houses; I’m a poor young renter) to buy a construction business, which then went under. And foreclosure ensued.
Now, from the looks of it, a lot of these people are not financial geniuses or even very good money-handlers in the first place. What’s to keep people from selling the house and blowing the cash? Or taking out home equity loans (do I have that term right?) that they won’t be able to pay back? Is that simply a hazard of being in the business of extreme home makeovers?
I have not seen too many of the episodes but to be fair they generally are not in trouble due to being financially inept. There is usually some type of physical disability or illness involved.
I looked some things up for that other thread to make a different point. The family you are talking about didn’t use any money directly from the show. They later took out a mortgage on the new value of the house to start up a business. Not a horrible thing to do, but risky. Having a nice house isn’t going to put food on the table. Not a good time to start a construction business.
One of the other pitfalls is the rise in property taxes. It may not be a huge problem in other parts of the country but there have been a few shows in NJ. Property taxes here would give most people a stroke. The state had to pass a law because this woman in Irvington (think Newark only worse) suddenly had a million dollar home and Irvington wanted to raise her taxes through the roof.
I don’t see how the show can stop anyone from selling or taking out a loan on the value of the house. Why should they?
Thanks, Loach. I don’t watch the show; I’ve only seen bits and pieces in passing. And I am pathetically ignorant on just about everything involving owning a home. (It’s not going to happen for me for a few years, at least, so I have some time to get informed…)
I’m glad to hear they choose families with hardships that they didn’t create. I’m not against helping out the poor (or even social welfare), but I don’t necessarily think handing over what amounts to a brand-new super-expensive house is a good solution to poverty. That’s not what the show is about, is it? If the show’s purpose were to bring people out of poverty, they would do a lot better to give away several more modest homes than one big pimped-out house in each episode.
Regarding the last point, about why they should or can or can’t keep someone from turning the gift of a new home into cold, hard cash… Like I said, I haven’t seen much of the show, but it seems to me that everything is super-customized to each family. It feels somehow against the spirit of the show to turn around and profit off the gift, right after your whole community volunteers a ton of hours to help you out. However, I accept that “against the spirit” is a lousy justification.
I saw the show a lot more in the beginning. It was much different. It seemed like it was mostly normal families in need of an upgrade. Maybe there was a house fire or something. But it was close enough to reality that you could she them picking your house and wondering what it would be like. The show concentrated more on the build and not the family. It was interesting to see how they did such extensive renovations in such a short time. There was a lot of coverage of the problems they ran into and the difficulty in finishing in time.
At some point it morphed into a sob story of the week. The shows are much more about the families and the problems they face. Now you have to be someone with a rare genetic disease that causes you to carry your brain in a jar who has a husband who is just a torso who has adopted 8 primordial dwarves just to be considered for the show.
I think I would watch the brain in the jar or the torso that adopted 8 primordial dwarves episodes but otherwise I stopped watching once the sob stories took over completely and they stopped showing any actual home improvement until the end of the show. I watched to see home improvement ideas that I could covet or plan to use for my own home, I really don’t want to watch the home improvement guys crying about how touched they were by the family.
I agree. The show was interesting in the beginning. Especially in contrast to some of the shows on HGN. HGN would show a real renovation (by real I mean a renovation paid for by the family and just filmed for the show) on a home and it would take months. Makeover would do more extensive remodeling but do it in a few days. I liked seeing the problems they ran into and the trouble they had with the deadline. Now it is mostly interviews with the family and showing them on vacation. They show more demolition than actual work. I guess demolition is more funner. I hadn’t seen the show in years but they started showing it on AFN. Since I’m a captive audience I’ve recently seen a couple of shows.