OnTheBrink Posted May 9, 2010 Share Posted May 9, 2010 Let's say you win a raffle. The prize is the choice between a house valued at approx $250K or a lump sum cash amount of $150K. Let's say the house is workable for your family and you like it. Which do you choose and why? Quote Link to comment Share on other sites More sharing options...
Mrs Mungo Posted May 9, 2010 Share Posted May 9, 2010 Do I have the cash available needed to pay taxes on the house? Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted May 9, 2010 Author Share Posted May 9, 2010 Do I have the cash available needed to pay taxes on the house? I don't know. Are you supposed to pay those up front? Quote Link to comment Share on other sites More sharing options...
Liz CA Posted May 9, 2010 Share Posted May 9, 2010 Let's say you win a raffle. The prize is the choice between a house valued at approx $250K or a lump sum cash amount of $150K. Let's say the house is workable for your family and you like it. Which do you choose and why? Depends on a lot. How old is the recipient of the prize? Does he/she have other debt? Children that will be soon or are going to college? Has what kind of earning potential? I think I would choose the cash in my situation - but then...I may have to think about it a little longer. :) Quote Link to comment Share on other sites More sharing options...
Dandelion Posted May 9, 2010 Share Posted May 9, 2010 I would take the house (after having an independent appraisal done to ensure it really is worth $250K and assuming it's in an area where real estate has held - and is holding - its value). :) Why? I wouldn't want to turn down the extra $100K. Depending on where it's located, we might not even move into it. We would probably turn around and sell it. Quote Link to comment Share on other sites More sharing options...
Mrs Mungo Posted May 9, 2010 Share Posted May 9, 2010 I don't know. Are you supposed to pay those up front? Probably? I don't know. Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted May 9, 2010 Author Share Posted May 9, 2010 Depends on a lot. How old is the recipient of the prize? Does he/she have other debt? Children that will be soon or are going to college? Has what kind of earning potential? I think I would choose the cash in my situation - but then...I may have to think about it a little longer. :) I don't know. How old ARE you? YOU'RE the recipient of the prize. Remember, it's a hypothetical of what YOU'D do. In your current situation. Now. :D Quote Link to comment Share on other sites More sharing options...
wy_kid_wrangler04 Posted May 9, 2010 Share Posted May 9, 2010 Let's say you win a raffle. The prize is the choice between a house valued at approx $250K or a lump sum cash amount of $150K. Let's say the house is workable for your family and you like it. Which do you choose and why? I would take the cash. I LOVE my house, but there are a few things I want to do to it to make it even more lovable :D Quote Link to comment Share on other sites More sharing options...
Mrs Mungo Posted May 9, 2010 Share Posted May 9, 2010 I don't know. How old ARE you? YOU'RE the recipient of the prize. Remember, it's a hypothetical of what YOU'D do. In your current situation. Now. :D If I had to pay taxes up front, then I would take the cash. We're not in a place where we will be living permanently. I wouldn't want to have to mess with renters or let the house just sit. If I did *not* have to pay taxes up front and the sale of the house would net me (after taxes) more than $150k and I thought I could sell the house fast, then I would take the house and immediately sell it. Third scenario: if I liked the house and did not have to pay taxes immediately on the house and it was in the area where we eventually plan to retire, then we might keep the house and let one (or more) of my sisters or cousins to live in it and pay rent until we moved back. We could figure out the tax thing later. Quote Link to comment Share on other sites More sharing options...
RoughCollie Posted May 9, 2010 Share Posted May 9, 2010 The winner has to pay current year income taxes on the prize, so I would take the cash and pay the income taxes from it. I would not want to pay income taxes on the house value from my own cash (supposing I had any) to preserve liquidity. If I had that kind of money, I'd probably already have a house that I liked just fine anyway. Quote Link to comment Share on other sites More sharing options...
Stacie Posted May 9, 2010 Share Posted May 9, 2010 I think I'd take the house, though I'd not live in it. I would likely rent it out (houses in that range typically rent for $2500-3000 per month around here. I could take an equity loan to pay the taxes, then use the equity loan payments and depreciation as tax advantages. The extra monthly income after insurance and taxes are paid can be set aside in an investment for retirement, college, or to set up the children for their needs as they fly the coop one day. Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted May 9, 2010 Author Share Posted May 9, 2010 The winner has to pay current year income taxes on the prize, so I would take the cash and pay the income taxes from it. I would not want to pay income taxes on the house value from my own cash (supposing I had any) to preserve liquidity. If I had that kind of money, I'd probably already have a house that I liked just fine anyway. That's a good point. There's a charity raffle going on in my city and I was thinking about which I'd choose if I won (which won't happen because I won't be buying a $100 ticket) and I couldn't decide. Why it matters to me what I'd do in a scenario that I'll never be involved with is a mystery to me, but I've been thinking about it all evening. Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted May 9, 2010 Author Share Posted May 9, 2010 I think I'd take the house, though I'd not live in it. I would likely rent it out (houses in that range typically rent for $2500-3000 per month around here. I could take an equity loan to pay the taxes, then use the equity loan payments and depreciation as tax advantages. The extra monthly income after insurance and taxes are paid can be set aside in an investment for retirement, college, or to set up the children for their needs as they fly the coop one day. Can you get an equity loan on a brand-new house? Or do you mean an equity loan on the house you currently own? Quote Link to comment Share on other sites More sharing options...
Liz CA Posted May 9, 2010 Share Posted May 9, 2010 If I had to pay taxes up front, then I would take the cash. We're not in a place where we will be living permanently. I wouldn't want to have to mess with renters or let the house just sit. If I did *not* have to pay taxes up front and the sale of the house would net me (after taxes) more than $150k and I thought I could sell the house fast, then I would take the house and immediately sell it. Third scenario: if I liked the house and did not have to pay taxes immediately on the house and it was in the area where we eventually plan to retire, then we might keep the house and let one (or more) of my sisters or cousins to live in it and pay rent until we moved back. We could figure out the tax thing later. ;) I think Mrs. Mungo and I are too analytical to make this something easy to answer. I am still thinking about it...:D Quote Link to comment Share on other sites More sharing options...
Stacie Posted May 9, 2010 Share Posted May 9, 2010 Can you get an equity loan on a brand-new house? Or do you mean an equity loan on the house you currently own? If the title of the house is in your name, and you own if free and clear per the raffle agreement you should be able to get an equity loan. I would think you're much less of a risk than someone who has a large mortgage on it and is applying for an equity loan on top of that! Quote Link to comment Share on other sites More sharing options...
Mrs Mungo Posted May 9, 2010 Share Posted May 9, 2010 ;) I think Mrs. Mungo and I are too analytical to make this something easy to answer. I am still thinking about it...:D I agree. I'm still thinking over possible scenarios. I would probably just take the cash to make it easy for myself. :tongue_smilie: Quote Link to comment Share on other sites More sharing options...
RoughCollie Posted May 9, 2010 Share Posted May 9, 2010 TWhy it matters to me what I'd do in a scenario that I'll never be involved with is a mystery to me, but I've been thinking about it all evening. Maybe because it is fun to pretend. I do that with the lottery when the prize is huge. I figure I'll get 1/4 of the money after taxes, since I'll take the cash instead of annuity. Then I plan what to do with it. Quote Link to comment Share on other sites More sharing options...
Mrs Mungo Posted May 9, 2010 Share Posted May 9, 2010 Maybe because it is fun to pretend. I do that with the lottery when the prize is huge. I figure I'll get 1/4 of the money after taxes, since I'll take the cash instead of annuity. Then I plan what to do with it. I do the same thing. Especially when it gets up to around $100 million. I mean, 30 million is about what Paris Hilton and Osama bin Laden are worth (huh, I never thought I would use those names in the same sentence). That is a LOT of money. I ponder the many, many things I would do with it. Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted May 9, 2010 Author Share Posted May 9, 2010 If the title of the house is in your name, and you own if free and clear per the raffle agreement you should be able to get an equity loan. I would think you're much less of a risk than someone who has a large mortgage on it and is applying for an equity loan on top of that! That makes sense. Quote Link to comment Share on other sites More sharing options...
Tap Posted May 9, 2010 Share Posted May 9, 2010 I would take the house. I would refinance the home I live in to pay the taxes, that way I only owe on one house. I would then either rent it out or switch houses (depends on too many details) and rent out our current home. I would then take any moneys from it to pay down the mortgage. Quote Link to comment Share on other sites More sharing options...
Pamela H in Texas Posted May 9, 2010 Share Posted May 9, 2010 Where I live, a $250K house is WAY more house than I need (just for example, my house was well less than half that price and is 2400 sq ft on an acre of land; THIS is way more house than we need--when we had 5 kids, our house was all of 1200 sq ft). So it really would depend on how quickly I could get rid of the house versus my needs, I think. I'd probably ask on here, talk to my parents, probably talk to a financial person before making a final decision though. Quote Link to comment Share on other sites More sharing options...
Danestress Posted May 9, 2010 Share Posted May 9, 2010 pay the taxes on it, go home with the remainder, no worries, no repairs, no neighbors, no responsibility. I own a house and it's lovely and light and makes me happy to be in. But the burden of home ownership is always with me, and I wouldn't not own a second home on a bet. I don't want to do the work of renting a home out or selling one and living in the other. Give me the cash, let me go home, I'll use it to pay off some of the house I already have (or hey, remodel the bathroom!) and ta da. I'm done. Quote Link to comment Share on other sites More sharing options...
BeckyFL Posted May 9, 2010 Share Posted May 9, 2010 The winner has to pay current year income taxes on the prize, so I would take the cash and pay the income taxes from it. I would not want to pay income taxes on the house value from my own cash (supposing I had any) to preserve liquidity. If I had that kind of money, I'd probably already have a house that I liked just fine anyway. Good thinking! Same here. I love my house and my location too so even if I took the house, it would be to sell it and the income tax issue would be pretty stressful. Quote Link to comment Share on other sites More sharing options...
Renee in NC Posted May 9, 2010 Share Posted May 9, 2010 Scenarios: $150,000 cash -$27000 taxes =$123,000 net $250,000 house -$62000 taxes =$188,000 net -$15,000 real estate commission -$2500 other costs = $170,500 net Hmmmm....if I could be sure of selling the house, I might take it. In our area, with the market right now? I might just take the cash! We couldn't keep the house - even if we got a mortgage to cover the taxes, the amount (with taxes and insurance) would be what our rent is now, but we would be responsible for all repairs. I don't think we would take that risk. So, I would probably take the cash, pay the taxes, and buy something with the $123,000 I had left. That would get us a house I have been looking at near here. It's 2300 square feet, 4 bedroom, 4 bath in need of work on .75 acres. We'd have some cash left for immediate upgrades and money to put towards repairs (because we'd have no housing payment.) Quote Link to comment Share on other sites More sharing options...
Wendi Posted May 9, 2010 Share Posted May 9, 2010 We're in an area that's been hit really hard by the real estate boom and bust. So I'd be nervous about thinking the house is "worth" $250K. And just turning around and selling it might not be as easy as one might think. So my impulse would be to take the cash and invest it. Wendi Quote Link to comment Share on other sites More sharing options...
Carol in Cal. Posted May 9, 2010 Share Posted May 9, 2010 Otherwise the income taxes would be crushing. Every time someone keeps one of those houses, it seems to work out badly. Quote Link to comment Share on other sites More sharing options...
elegantlion Posted May 9, 2010 Share Posted May 9, 2010 I don't know. How old ARE you? YOU'RE the recipient of the prize. Remember, it's a hypothetical of what YOU'D do. In your current situation. Now. :D :lol: Like the old question, "You're driving a bus..." I'd take the cash and have dh build me a house. With his ability and our sweat equity, we could build a much better house. Then we could chose the location. Quote Link to comment Share on other sites More sharing options...
The Girls' Mom Posted May 9, 2010 Share Posted May 9, 2010 Depends. If the house were here, and in an area that held re-sale value I would take the house. We are currently in a rental and waiting for our out of state house (that's paid for) to sell. Then we could save on rent money, and still have some value. However, if it were somewhere else, or in a low re-sale area, I would take the cash. Quote Link to comment Share on other sites More sharing options...
Mejane Posted May 9, 2010 Share Posted May 9, 2010 I'd take the cash. With it, I could pay off our house, which I love. Quote Link to comment Share on other sites More sharing options...
HRAAB Posted May 9, 2010 Share Posted May 9, 2010 I think I would take the house because over the long haul it could generate more income - depending if it were in our area and the specific location. I would be looking for what would bring in the most money over the years. Quote Link to comment Share on other sites More sharing options...
JenneinCA Posted May 9, 2010 Share Posted May 9, 2010 I would take the money. There are no houses in this area worth $250K that are in neighborhoods that I would be willing to live in. Quote Link to comment Share on other sites More sharing options...
Veritaserum Posted May 9, 2010 Share Posted May 9, 2010 The cash. Now how do we make this happen? :tongue_smilie: Quote Link to comment Share on other sites More sharing options...
LibraryLover Posted May 9, 2010 Share Posted May 9, 2010 (edited) Is there a chance of me winning something? ;) Edited May 9, 2010 by LibraryLover Quote Link to comment Share on other sites More sharing options...
Murphy101 Posted May 9, 2010 Share Posted May 9, 2010 Cash. Either way you have to pay the taxes on prize winnings. The $150 would probably actually be approx $90k after taxes. The house we have meets our needs well enough. We'd put half of that towards reducing our mortgage and the other half to financial needs such as house repairs. We'd probably set aside 5k to actually splurge on something fun such as a pool or swingset or small family vacation somewhere. Quote Link to comment Share on other sites More sharing options...
LibraryLover Posted May 9, 2010 Share Posted May 9, 2010 Cash. Either way you have to pay the taxes on prize winnings. The $150 would probably actually be approx $90k after taxes. The house we have meets our needs well enough. We'd put half of that towards reducing our mortgage and the other half to financial needs such as house repairs. We'd probably set aside 5k to actually splurge on something fun such as a pool or swingset or small family vacation somewhere. And cash is so easy. Quote Link to comment Share on other sites More sharing options...
ChrissySC Posted May 9, 2010 Share Posted May 9, 2010 The cash ... Because it is a lesser amount for which I would owe taxes (gains) ... I wouldn't have to move either! No packing, no selling, no moving in, no pet kennels .... I think you get the point along with my aweful noon-grammar. :) Quote Link to comment Share on other sites More sharing options...
DarlaS Posted May 9, 2010 Share Posted May 9, 2010 Let's say you win a raffle. The prize is the choice between a house valued at approx $250K or a lump sum cash amount of $150K. Let's say the house is workable for your family and you like it. Which do you choose and why? I would take the money. It's twice the balance on my mortgage, and we'd be debt free and have extra money in the bank. If I owed more than that on my current house, I'd take the house. Our current home though is 5 BR/ 3 bath, on 5 acres. It's close to a highway, with good neighbors, and taxes are affordable. Quote Link to comment Share on other sites More sharing options...
Quiver0f10 Posted May 9, 2010 Share Posted May 9, 2010 It would depend on where the house was located. I'd probably take the cash. Quote Link to comment Share on other sites More sharing options...
Mynyel Posted May 9, 2010 Share Posted May 9, 2010 I'd take the cash. With it, I could pay off our house, which I love. If I owned my home (which I don't I rent :001_smile:) I would do this as well. In the long run it would save you on mortgage payments and interest so you would end up getting "more" than what you won anyway! Quote Link to comment Share on other sites More sharing options...
cathmom Posted May 9, 2010 Share Posted May 9, 2010 I think it would depend on the exact location of the house. Dh doesn't want to stay in our house forever (well, I don't either), but we would not have the money to pay the taxes. So we would probably take the cash. 100K would really make a difference in our lives! Quote Link to comment Share on other sites More sharing options...
KidsHappen Posted May 9, 2010 Share Posted May 9, 2010 I'd take the cash. I already have a house and I certainly don't want to move again. With that much cash, I could pay off any debt, buy a few things we need and pay towards the middle two's college expenses. Quote Link to comment Share on other sites More sharing options...
OnTheBrink Posted May 9, 2010 Author Share Posted May 9, 2010 In this raffle, there are 3 houses available to choose from. They are all new construction in "highly desirable" subdivisions. Our area hasn't been hit very hard by the recent economic issues, so I'm pretty confident the homes are worth what they say they are. Tickets for the raffle are $100 each and they're selling only 4,000 tickets. I've toyed with buying a ticket, since it is a charity raffle. I figure the chances of my winning are slim, so I'd have to convince myself that I'm really just donating $$ to charity, not entering a raffle. Anyway, IF I entered and IF I happened to win, I think I'd take the money, despite how nice the homes are. Property taxes on two of them would be really high, based on where they are. I really just want a townhouse or condo with NO YARD WORK! This has been fun, though! Thanks for playing! :D Quote Link to comment Share on other sites More sharing options...
FlockOfSillies Posted May 11, 2010 Share Posted May 11, 2010 Cash. $250K will only buy you a shack in LA. Quote Link to comment Share on other sites More sharing options...
KJsMom Posted May 11, 2010 Share Posted May 11, 2010 I'd take the cash and buy the land that is just about to come up for sale behind my current home. If there was anything left I would put it on my mortgage. I know, no fun around here! Quote Link to comment Share on other sites More sharing options...
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