What Happens To Those New Home Winners When The Cameras Shut Off? Well, They Slowly Go Broke And Lose Those New Houses!
August 14th, 2022 by MG
Years ago, an online gaming legend named Dennis Fong won a Ferrari 328 convertible in an online gaming competition. I remember watching him as a teenager in awe as he did things other gamers never could. He was a favorite for the competition and I’d say sweeped it. Then he won the Ferrari of the man who built the game he dominated. It was a teenage nerd’s fairy tale come true. Maybe someday we could also win a car like that.
Only to realize of course, that there was no way we could actually AFFORD the car once we had it. Fong didn’t sell the car because he was more fortunate than most run of the mill gamers. Having had additional gaming success and fantastic connections with budding online websites, he had more revenue available than typical college students waiting tables to pay for school. Although, I also don’t believe he got to ever drive it full time either. Insurance, Gas, and Tires, would quickly eat up those funds.
So what happens in reality when you see someone win a new life, a new house, and the American Dream, on television?
CNNMoney covered the winnings of the Cruz family in HGTV’s annual Dream Home Sweepstakes.
They won $250,000, a GMC Denali SUV, and a gigantic, fully furnished, barn-inspired mansion on an acre of lakefront property in the East Texas town of Tyler.
But what happens once the excitement is over and the bills for all those new toys come in?
As the Cruzes toured the 6,000-square-foot, three-story structure – more than seven times the size of their modest home outside Chicago – each feature seemed more fantastic than the one before: the massive great room with its 30-foot ceilings and six-foot-wide fireplace; the master bedroom suite – in effect, a separate cottage connected to the main house by a breezeway, replete with a hot tub; the indoor elevator and the outdoor pool and fireplace; the guest house by the lake.
As they passed through each room, Shelly found herself touching everything – running her fingers over the granite-topped island in the kitchen; turning the knobs on the his-and-hers showerheads in the master bathroom; opening the doors of the laundry room’s two washers and two dryers.
“I feel like I’m looking at someone else’s house – this can’t possibly be ours,” Shelly said.
Added Don: “I’ve fantasized most of my life about living in a big house, but my dreams never came close to this.”
But a year later, the Cruzes are learning, painfully, that there can be such a thing as too big.
Too big indeed. Think about where you live for a moment. Think about cooling and heating bills, water bills, landscaping and upkeep bills, and the other costs of owning.
Don, 41, and Shelly, 38, have never slept in the master bedroom–it’s too secluded. At night, Don obsessively checks a live video feed of Donald’s room, two floors away from the bedroom they occupy, to make sure his son is okay.
The biggest problem, though, is that the Cruz family can’t afford their new bounty. Don, a stay-at-home dad, and Shelly, an administrative assistant who’s gone back to school to become an accountant, are quickly running through their winnings as they struggle to pay thousands a month for electricity, household help and other outsize bills for their outsize home.
On top of that, they had to take out a loan to pay off a $672,000 tax bill on their winnings.
Most people will never have to worry about the unexpected fallout from what looked to be a huge windfall. But like the Cruzes, millions of Americans may soon find themselves struggling to pay the bills for a house that’s bigger than they really need and suddenly more expensive than they can afford.
Ah yes, taxes. Take a look at The Price Is Right and all the prizes being won. Again, it seems like a dream come true for most, until you realize that you’re the one that has to pay for them:
Do I have to pay taxes on any money or prizes I win?
You don’t have to, just like the IRS doesn’t have to throw you in jail for not paying your taxes (but they’ll do it anyway). Yes, you must pay taxes on your winnings. If you win cash, the producers will typically deduct local taxes from that amount and give you a check for the difference. If you win a prize, you’ll get a 1099 and either have to pay the taxes yourself or forfeit your prize. Contrary to popular belief, you cannot simply take the cash value of the prize. Car winners also pay their own vehicle tag and registration fees.
But back to our story.. so what happened with the Cruz family?
It was when Don first got the tax bill that he knew that the dream was over. With no viable plan to pay for the upkeep on the house, let alone the tax bill, there was only one solution.
That night he huddled in the great room with his wife and son, knees touching, and told them they’d have to sell. Donald asked why. But when he saw his father crying, he stopped asking. The next day, they put the Dream Home up for sale.
Cruz originally tried to sell on his own, putting up a Web site, Doncruz.net, and listing the house for $5.5 million. But he went several months without a serious offer and recently hired a broker.
But some agents in the area say he’s aiming too high. They say the house is worth $2.5 million and may go for a lot less since million-dollar homes are rare in that part of Texas.
The Cruzes say they will be sad to leave once a deal is made, but confess that they’re also a little relieved. The Dream Home, they admit, is just too big. They miss their cozy quarters in Batavia. “With only one room to gather in you are forced to spend time together,” says Cruz. “I miss that.”
So next time you hear someone winning something spectacular, remember that everytime you win something, so does Uncle Sam.
Curious about the Extreme Home Makeover show I used to watch a good bit last year, some googling turned up a few related and very interested links.
Home makeover not as free as it seems – Property tax bill likely to double; work’s value could count as income
Extreme Makeover = Extreme Taxes? Tax Consequences of Home-Makeover TV Shows
ABC’s ‘Extreme Makeover: Home Edition’ exploits dubious means to dodge taxes
It is hard to feel sorry for Don Cruz and his family. After they sell their windfall $5 million for close to $2.5 million, and pay the $0.6 million tax bill, they’ll still be over $1 million tax free dollars ahead.
Dennis Fong was given $10,000 from John Carmack to move his car overseas. This amount certainly would exceed the price tag on shipping the car. So he didnt sell the car because he was well off, but couldnt drive it? Vague.
It’s currently parked in the front lobby of FiringSquad headquarters I believe. And as far as driving it, the day to day costs of the car wouldn’t be financially prudent. I’m sure he could afford to drive it, but I’m sure whatever he ended up driving instead was better for his situation at the time.
My brother was on Wheel Of Fortune last year (taped 3 months in advance), he won something like $10k and a new Pathfinder. The taxes on the truck were right around $10k, so all of that money went to pay the truck’s taxes, then he had to pay an additional $3k taxes on the $10k. It was kind of a raw and sweet deal, if you think about it. He got a brand new Nissan Pathfinder for $3,000!
[...] When You Win You Can’t Win What Happens To Those New Home Winners When The Cameras Shut Off? Well, They Slowly Go Broke And Los… They won $250,000, a GMC Denali SUV, and a gigantic, fully furnished, barn-inspired mansion on an [...]
Put me down with the “can’t feel sorry for them” camp. They never should’ve moved into the house in the first place. If I should ever win a several million dollar house, or several million dollar anything for that matter, mark my words, the changes to my life will be slow and cautious. I will pay every tax I have to pay, toss what’s left in the bank, and spend only the interest earned off that sum. I don’t need a giant house, and neither did they. The problem is simply that they were blinded by those fancy marble counter-tops, and that problem is no one’s fault but their own.
A close friend of mine won $250,000 in prizes for coming in first on a season long, elimination round style game show several years ago. After consulting with his accountant, he signed papers to forfeit all of the prizes since they were valued at their full retail price, and the taxes on them alone were more than they would actually cost if you did some comparison shopping.
Interesting how the unearned income of the commoners is taxes at such high rates while America’s elite class and its IMMENSE amount of unearned income has a plethora of tax breaks and hidey holes.
Try being on one of them crappy makeover shows.
Sure, we got 3k worth of stuff, but aside from being taxed on that, it took several months of work plus more money to fix what the “designer” did.
Those people who get an entire house re-built for them have it even worse; often they were poor to begin with & they don’t get any cash to help pay the bills, and the house is in a not-so-great neighborhood, so it can’t sell for as much.
Very true. There is a mansion here in Ahwatukee that is “non-conforming”. If it were in a more prominent neighborhood it would be worth much more, but much like what you mention and much like the Cruz’s mansion, location greatly reduces the market price for it, as well as the buying audience.
That’s so funny you mention that makeover shows, when I’d watch one I’d always say how tacky some of that stuff looked. To know that they add insult to injury by taxing you for it… YIKES!
2 years ago I won a “$10,000″ kitchen makeover from a local radio station. The installation was a disaster. When they tried to stick me with a $10,000 1099 for taxes is when I went ballistic. I got estimates for the kitchen from a big box store, wrote to the station, and said I wanted a revised 1099, I refused to pay taxes on what it was not worth. They relented. My “$10,000″ kitchen was really worth $4500, and that’s what I paid tax on.
[...] • What Happens To Those New Home Winners When The Cameras Shut Off? Well, They Slowly Go Broke And Los… [...]
[...] This is pretty funny (in a sad way). Don and Shelly Cruz won “$250,000, a GMC Denali SUV, and a gigantic, fully furnished, barn-inspired mansion on an acre of lakefront property in the East Texas town of Tyler.” And this is what happened: Don, a stay-at-home dad, and Shelly, an administrative assistant who’s gone back to school to become an accountant, are quickly running through their winnings as they struggle to pay thousands a month for electricity, household help and other outsize bills for their outsize home. [...]
Let get it straight, everything that is being done, like people who won prizes from game shows or anything, to being the lucky winner of prizes… Everyone should know that, this is when TAXES owns you and your life, either way, they found a way to get back at you and they will always have the right of way… They can put you in jail if they want too. To me, every prizes people won, you got stuck in there trap. Like people say, “my insurance cost more then my car”, but what happen to all of the money, if you never got into an accident. It goes all to taxes and other people cars. The same goes for, first time winner, never won before, got the money, but taxes takes over. The Federal, State, and the Government will ALWAYS WIN…
I enter contests all the time. If i won my dream home and I never miss an entry It would be sold before the paint dried and i would buy my real dream home a modest cabin on a lake. anyone living above their means in any fashion has no sympathy from me.Same with cars, you sell the “Denaili” back to the dealer when it comes in for cash. He deducts wholesale from retail and gives you the difference. You pay your taxes, take your 17 thousand or so and go buy a reasonable car or a good used car or pocket the money. This is not brain surgery. When you are blessed you are grateful and make the best of it. Woe is me is so “entitled”. Pay your taxes and shut it.
My real estate clients bring these points home for me every day. The wealthiest clients, buyig the biggest homes, consider and complain the most about the high cost of upkeep and high taxes. They KNOW the devil is in the details. My first-time buyers are the ones I have to remind about the costs of these things, and caution about getting all those monthly expenses figured out before they sign.