# Win a Mansion! - No thanks? **URL:** \ **Category:** Factual Questions\ **Created:** [January 24, 2011, 11:47pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849 "2011-01-24T23:47:01Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [January 25, 2011, 6:32am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/21 "2011-01-25T06:32:04Z")
> [@rachelellogram](#): > > Is it illegal to take in lodgers on your own goddamn property now? My current living situation entails renting a room from a private homeowner (though nothing close to a mansion). Are you saying this might be illegal if the home happened to be larger? That’s ABSURD. > > You wouldn’t need to physically change anything about the home. Just sublet it out. I refuse to believe that a property owner cannot sublet his own property however the hell he wants to. To an extent, no one cares about you renting one room out, or the entire house in one fell swoop. But more than that, and you run afoul of licensing and zoning laws. Most houses are zoned single-family, not for apartments. And, usually apt buildings need a permit, pay a annual fee, and are subject to licensing and inspections. San Jose does occ crack down upon dudes renting out a house to 4-5 families/tenants. Really, there are many many things you can’t do on your “own property”. And for good reasons. I have checked into these home auctions, tax-wise. 1st: the home is always over-valued. But you’d still have to pay taxes on the entire amount, as winnings. That’d be something like 36% Federal and also State. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [January 25, 2011, 6:42am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/22 "2011-01-25T06:42:24Z")
> [@Cat\_Whisperer](#): > > As far as I know regarding the laws _here_, any house you sell beyond your personal dwelling will be subject to capital gains taxes, because anything beyond the house you’re living in is rightly assumed to be a business venture. I think you could get around capital gains by selling the house you’re currently living in and moving into the larger one (taking the - I assume - much smaller hit), living in the larger one for however long it takes to establish it as your primary residence for tax purposes, then sell it and sock the money away. For the record, lottery winnings are not taxable in Canada (again, as far as I know). One of the first stops after winning a multi-million dollar house is your tax lawyer/accountant. 🙂 No, when you sell a house, the capital GAIN is the purchase price less your basis in the house; the basis, in this case, should be the fair market value at the time you won it. ---
**Author:** ![Cat\_Whisperer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cat_whisperer/32/4839_2.png) [@Cat\_Whisperer](https://boards.straightdope.com/u/Cat_Whisperer)\ **Post date:** [January 25, 2011, 6:56am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/23 "2011-01-25T06:56:13Z")
Well, like I said, first stop is your tax lawyer/accountant. 🙂 ---
**Author:** ![Colophon](https://avatars.discourse-cdn.com/v4/letter/c/f05b48/32.png) [@Colophon](https://boards.straightdope.com/u/Colophon)\ **Post date:** [January 25, 2011, 8:30am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/24 "2011-01-25T08:30:35Z")
Slight hijack here, but I always find it weird in these kind of threads that competition/lottery prizes are _taxed_ in the USA. It seems totally unfair to win something and then hand over a huge chunk of it. Here in the UK, such prizes are tax-free - you keep all of what you win - and I’d always assumed that was the norm. Is it the UK or the US that’s the odd one out? ---
**Author:** ![Nava](https://avatars.discourse-cdn.com/v4/letter/n/da6949/32.png) [@Nava](https://boards.straightdope.com/u/Nava)\ **Post date:** [January 25, 2011, 8:43am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/25 "2011-01-25T08:43:51Z")
In Spain those prizes are taxable as income, as well as becoming part of your “patrimonio” (if the prize is something that would normally get taxed under “property” taxes, it will); the only lottery which is not taxable as income is state lotteries, which is one of the reasons why there is a ruckus over the current attempt to privatize Lotería Nacional. There is a special yearly raffle from LN, “the gold raffle”: prizes are bars of gold instead of cash, and the money collected goes to the Red Cross; years ago, some genius declared that gold “taxable as income” on accunt of the Red Cross not being the government and the resulting immediate outcry was… loud, to say the least; he had to back up. Sometimes the group organizing the raffle will include all or part of those taxes; which ones they include must be listed in the raffle info, and the raffle must be authorized by the government. There have been cases like someone winning an airplane in a TV show and being driven to bakruptcy by it. ---
**Author:** ![Quartz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quartz/32/267_2.png) [@Quartz](https://boards.straightdope.com/u/Quartz)\ **Post date:** [January 25, 2011, 8:56am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/26 "2011-01-25T08:56:45Z")
> [@Colophon](#): > > Here in the UK, such prizes are tax-free - you keep all of what you win - and I’d always assumed that was the norm. Is it the UK or the US that’s the odd one out? Actually, with the National Lottery, you pay the tax on the ticket (it’s included in the price), not the prize. The government gets their money either way! ---
**Author:** ![Colophon](https://avatars.discourse-cdn.com/v4/letter/c/f05b48/32.png) [@Colophon](https://boards.straightdope.com/u/Colophon)\ **Post date:** [January 25, 2011, 11:37am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/27 "2011-01-25T11:37:33Z")
> [@Quartz](#): > > Actually, with the National Lottery, you pay the tax on the ticket (it’s included in the price), not the prize. The government gets their money either way! Hmm, I hadn’t thought of it that way. But I’d rather pay my tax on a £1 ticket than an £8,000,000 jackpot 🆒 ---
**Author:** ![Gyrate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gyrate/32/3588_2.png) [@Gyrate](https://boards.straightdope.com/u/Gyrate)\ **Post date:** [January 25, 2011, 11:50am UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/28 "2011-01-25T11:50:22Z")
> [@Quartz](#): > > Actually, with the National Lottery, you pay the tax on the ticket (it’s included in the price), not the prize. The government gets their money either way! Annoyingly, if I (as a US citizen and UK resident) won the UK lottery I’d still have to pay US income tax on it. Stupid US tax laws… Or I could stash it in the Caymans, not say anything to the IRS and hope for the best but I’m not clever enough to get away with that. ---
**Author:** ![Colophon](https://avatars.discourse-cdn.com/v4/letter/c/f05b48/32.png) [@Colophon](https://boards.straightdope.com/u/Colophon)\ **Post date:** [January 25, 2011, 12:06pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/29 "2011-01-25T12:06:32Z")
> [@Gyrate](#): > > Annoyingly, if I (as a US citizen and UK resident) won the UK lottery I’d still have to pay US income tax on it. Stupid US tax laws… > > Or I could stash it in the Caymans, not say anything to the IRS and hope for the best but I’m not clever enough to get away with that. Or you could give it to me - just think of all the millions you’d be saving. 😛 ---
**Author:** ![GreedySmurf](https://avatars.discourse-cdn.com/v4/letter/g/a698b9/32.png) [@GreedySmurf](https://boards.straightdope.com/u/GreedySmurf)\ **Post date:** [January 25, 2011, 12:22pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/30 "2011-01-25T12:22:52Z")
> [@Colophon](#): > > Slight hijack here, but I always find it weird in these kind of threads that competition/lottery prizes are _taxed_ in the USA. It seems totally unfair to win something and then hand over a huge chunk of it. > > Here in the UK, such prizes are tax-free - you keep all of what you win - and I’d always assumed that was the norm. Is it the UK or the US that’s the odd one out? Australia is the same as the UK, ie no tax on lottery winnings. ---
**Author:** ![jjimm](https://avatars.discourse-cdn.com/v4/letter/j/ba8739/32.png) [@jjimm](https://boards.straightdope.com/u/jjimm)\ **Post date:** [January 25, 2011, 12:38pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/31 "2011-01-25T12:38:20Z")
This is the original meaning of the phrase “white elephant”. ---
**Author:** ![Sigmagirl](https://avatars.discourse-cdn.com/v4/letter/s/c89c15/32.png) [@Sigmagirl](https://boards.straightdope.com/u/Sigmagirl)\ **Post date:** [January 25, 2011, 12:56pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/32 "2011-01-25T12:56:39Z")
> [@Cayuga](#): > > Every year, HGTV gives away a “dream home.” (Or they did, anyway; I haven’t watched in a while.) The winners almost invariably sell it immediately. This year’s HGTV dream home includes a cash prize of $500,000. I’ll let you know when I win. ---
**Author:** ![Dead\_Cat](https://avatars.discourse-cdn.com/v4/letter/d/9fc29f/32.png) [@Dead\_Cat](https://boards.straightdope.com/u/Dead_Cat)\ **Post date:** [January 25, 2011, 1:23pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/33 "2011-01-25T13:23:17Z")
> [@jjimm](#): > > This is the original meaning of the phrase “white elephant”. Just to expand on this a little in case it was not obvious (as it would not have been obvious to me before I learned the bit of trivia I am about to explain): in Thailand white elephants (as in actual elephants, coloured white) are (or perhaps were?) all the property of the king. As such, you are not allowed to kill them, nor even put them to work, but you have to pay for their upkeep. Thus anyone who owned an elephant herd which gave birth to an albino elephant was in a bit of a fix, as they had a useless but expensive object on their hands, for a very long time. Hence the origin of the term “white elephant”. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [January 25, 2011, 2:11pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/34 "2011-01-25T14:11:32Z")
> [@Nametag](#): > > No, when you sell a house, the capital GAIN is the purchase price less your basis in the house; the basis, in this case, should be the fair market value at the time you won it. How do you figure that if I win a house that my cost basis is the fair market value, and not the $150 I spent on the raffle ticket? In other words, I think you’re incorrect. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [January 25, 2011, 2:19pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/35 "2011-01-25T14:19:59Z")
> [@Nametag](#): > > No, when you sell a house, the capital GAIN is the purchase price less your basis in the house; the basis, in this case, should be the fair market value at the time you won it. Yeah, except your “gambling winnings” in this case are taxable as income, i.e. the difference between your lottery ticket’s cost and what you won with it. ---
**Author:** ![Sparky812](https://avatars.discourse-cdn.com/v4/letter/s/eb9ed0/32.png) [@Sparky812](https://boards.straightdope.com/u/Sparky812)\ **Post date:** [January 25, 2011, 2:44pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/36 "2011-01-25T14:44:17Z")
> [@Cat\_Whisperer](#): > > Well, like I said, first stop is your tax lawyer/accountant. 🙂 Actually, you’re first stop should be to a cell phone store. Buy a new pay-as-you-go phone and only give it to immediate family members and close personal friends that you trust. Disconnect or ignore all incoming calls on your previous lines. While you’re at it get a new e-mail address and delete any other accounts you may have. ---
**Author:** ![gazpacho](https://avatars.discourse-cdn.com/v4/letter/g/6f9a4e/32.png) [@gazpacho](https://boards.straightdope.com/u/gazpacho)\ **Post date:** [January 25, 2011, 4:51pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/37 "2011-01-25T16:51:23Z")
> [@Dewey\_Finn](#): > > How do you figure that if I win a house that my cost basis is the fair market value, and not the $150 I spent on the raffle ticket? In other words, I think you’re incorrect. If the house winnings work like stock options. The difference between what you payed ($150) and the fair market value the day you get title is ordinary income. The difference between fair market value the day you won and the day you sell is capitol gain or loss. ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [January 25, 2011, 5:15pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/38 "2011-01-25T17:15:59Z")
> [@gazpacho](#): > > If the house winnings work like stock options. The difference between what you payed ($150) and the fair market value the day you get title is ordinary income. The difference between fair market value the day you won and the day you sell is capitol gain or loss. Yes, this is correct. (Except it’s capital - a not o). There are some tricks you could try to reduce tax. The house could be donated to a charitable remainder trust, permitting you to take a tax deduction for the house right now. The terms of the trust would permit you to live there (provided you pay upkeep, etc.) and the charity keeps the house after you die. The catch there is that you can’t write off more than 50% of your income to charity in any one year, so you’d still pay tax on $1.1 million. (But, you’d carry over the remaining $1.1 million as a write-off into future years, so you’d be pretty much set in terms of minimizing income tax for the rest of your life.) Either way, you could always take out a mortgage to pay the tax. Since there’s plenty of equity in the house, I don’t think you’d have much trouble qualifying. You could also try your luck with the IRS collections process. Sometimes, they’ll just put a lien for the taxes on a house, rather than trying to seize assets or force a sale. A tax lien wouldn’t be as good as a mortgage, but not such a bad thing either - it would defer payment on the taxes until you sell the house. ---
**Author:** ![Gyrate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gyrate/32/3588_2.png) [@Gyrate](https://boards.straightdope.com/u/Gyrate)\ **Post date:** [January 25, 2011, 5:25pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/39 "2011-01-25T17:25:46Z")
> [@dracoi](#): > > There are some tricks you could try to reduce tax. The house could be donated to a charitable remainder trust, permitting you to take a tax deduction for the house right now. The terms of the trust would permit you to live there (provided you pay upkeep, etc.) and the charity keeps the house after you die. The catch there is that you can’t write off more than 50% of your income to charity in any one year, so you’d still pay tax on $1.1 million. (But, you’d carry over the remaining $1.1 million as a write-off into future years, so you’d be pretty much set in terms of minimizing income tax for the rest of your life.) > > Either way, you could always take out a mortgage to pay the tax. Since there’s plenty of equity in the house, I don’t think you’d have much trouble qualifying. How could you take out a mortgage on a house you just donated to charity? ---
**Author:** ![suranyi](https://avatars.discourse-cdn.com/v4/letter/s/e36b37/32.png) [@suranyi](https://boards.straightdope.com/u/suranyi)\ **Post date:** [January 25, 2011, 6:12pm UTC](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849/40 "2011-01-25T18:12:24Z")
> [@Gyrate](#): > > How could you take out a mortgage on a house you just donated to charity? It’s not a charity, it’s a [charitable remainder trust](http://en.wikipedia.org/wiki/Charitable_remainder_unitrust), which is quite different. In essence, a charitable remainder trust is a way to give things to charity but keep control over them, temporarily, as well. E.g. you can take a tax deduction now, but the charity only gets the item after you die. [Previous page](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849.md?page=1) [Next page](https://boards.straightdope.com/t/win-a-mansion-no-thanks/568849.md?page=3)