Maine is world famous for its lobster, coastline and lighthouses. However, Maine is also infamous for its high tax burden.
Unfortunately, its not just the location of the 2012 diy Blog Cabin Coastal Retreat in Waldoboro, Maine that will create tax sticker shock for the winner. The rules of this contest leave the winner few alternatives other than to suck-it-up and pay the tax man or sell the home (and still pay the tax man). From the rules:
Real estate transfer taxes, deed recording charges and closing costs, if not the obligation of the Developer pursuant to an agreement with DIY (the “Home Contract”) to acquire the home, shall be the sole responsibility of the Grand Prize Winner, as will all future real estate taxes and other expenses related to the maintenance of the house. Title insurance and homeowner’s hazard and liability insurance shall be the sole responsibility of the Grand Prize Winner. Condition of title to home shall otherwise be as set forth in the Home Contract.
Total ARV of the Grand Prize is $699,500
All costs, taxes, fees, and expenses associated with any element of a prize not specifically addressed above are the sole responsibility of the Grand Prize Winner. All federal, state and local taxes on prize are the Grand Prize Winner’s responsibility. The Grand Prize Winner will be issued a 1099 tax form for the ARV of the Grand Prize.
Overall, the federal and state income tax bill comes to a whopping $260,827 (this analysis excludes the myriad of other taxes such as any deed or transfer taxes and, most especially, the property tax which you pay year, after year, after year . . . well, you get the picture).
It is too bad the contest is not being held in 2013 because Maine’s top personal income tax rate will drop from 8.5 percent o 7.95 percent which would save the winner some serious coin.
And unlike previous contests, such as the HGTV 2012 Green Home Giveaway or the HGTV 2012 Dream Home Giveaway, there is no escape clause that will let you take cash in lieu of the home. So you are stuck with the home and the tax man . . . have fun!