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Sounds like a dream: the staff of ABC's "Extreme Makeover: Home Edition" shows up, builds a palatial new home and hands you the keys. But months after the TV crews leave, many of the "lucky" homeowners find they can't afford the king-sized property taxes and bills that came along with their new homes, and some are now facing foreclosure.According to at least one report, six families in the last few months have come to the conclusion that their dream house is really a financial nightmare.
That's because those wonderful folks at the IRS (give me a break -- it's tax filing time soon, of course I'm going to kiss a little ass and call the people who work at IRS "wonderful!." Love and kisses, too!) look at such prize winnings, whether cash or a newly rebuilt home, as income. And guess who they expect to pay the taxes on that income?
Back in December, one Web site reported on the plight of Brian Wofford, whose home was transformed by "Extreme Makeover: Home Edition" from a 1,212-square-foot house into a 43,337-square-foot wonder. The chiropractor then mortgaged the California property for almost $800,000 through several re-fis.
Well, we all know what's happened to the value of California real estate in recent years.
He ended up facing foreclosure until "media attention" reportedly convinced a bank to at least offer a three month trial loan modification.
Loansafe.org is reporting that the show's producers have been so taken aback by the "recent string of foreclosures," they are starting to think about how to do the show differently. One possibility is to build more "sensible homes" for winners -- in other words, homes they may actually be able to afford the property taxes on!
All games shows, not just "Extreme Makeover: Home Edition," say they provide contestants with financial guidance on how to deal with their winnings. But, let's face it, no amount of advise can really prepare someone for the rush of higher taxes, utility bills and maintenance costs associated with moving into a mini-mansion.
Charles Feldman is a journalist, media consultant and co-author of the book, "No Time to Think: The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.
