About Winning The HGTV Internet Sweepstakes

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Internet sweepstakes prizes come small, medium, large and humongous. Among the largest of them all is the very popular HGTV Dream Home Internet sweepstakes, where a house is given away yearly. That’s right, a new house worth over a million dollars, fully furnished, and six figures in cash to live on is included with the hose prize. Yep, some people who enter Internet sweepstakes have won some pretty nice loot.

It appears unbelievable that such prizes are being given away free, but they definitely are, and it happens every year. HGTV, the popular cable channel, runs the Dream Home giveaway as daily entry sweepstakes, and some very lucky people have been given the keys to the front door of a shiny new home.

Winning a new home sounds like a dream come true, and it has been for many winners of Internet sweepstakes. But occasionally, the prizes turn into a nightmare for the winners because of their high value. The obvious reasons : Taxes and upkeep. Most people sell their house wins immediately, but here is an unfortunate story about a man who didn’t sell his HGTV Dream Home.

Dream House Win Becomes A Nightmare

In 2005, Don Cruze won the most coveted Internet sweepstakes, the HGTV Dream Home. Cruze won a 6,000 square foot house located in Tyler, Texas and $250,000 in cash. Fantastic for him, right? Wrong.

internet sweepstakes

HGTV Dream Home

Most winners of the HGTV Dream Home Internet sweepstakes sell their winning home, but Cruze had other ideas. He decided to keep his new house, keep his old house, with the expectation that he and his family could live off the cash that he won. Unfortunately, the taxes and upkeep overwhelmed Cruze, and he nearly lost everything. His tax bill from Uncle Sam alone cost $672,000 for his wins, and that figure doesn’t include the cost of property taxes, upkeep and insurance.

Cruze eventually sold his house to a buyer in Dallas, Texas, for $1.3 million, which probably covered his expenses and debts. Unfortunately for Cruze, hubris turned a dream prize into a nightmare, as his shrewdest move would have been to put the house up for sale from the get-go. Few people know that HGTV will actually buy the house from the winner, so if you are lucky enough to win the dream home, just take the money unless you have considerable assets and income to stay afloat.

Giveaways, the 1099 and Taxes

Internet Sweepstakes wins are considered “other income” by the IRS, and you are required to include the value of your wins in your tax return. Many people will tell you that wins worth under $600 are not reportable, but this isn’t true. The fact is, the sponsor is required to provide a tax statement to the winner if the value of the prize exceeds $600 (but they don’t always do it). Technically, you are required to report all wins, regardless of their value. This law covers Internet sweepstakes, mail-in sweepstakes, raffles, contests, giveaways or whatever you want to call them.

If you win a large Internet sweepstakes prizes, the IRS will definitely be notified, per the law, and you will need to report your 1099 winnings properly on your return. This article is merely friendly advice, and shouldn’t be taken as gospel; contact your accountant for more details on what you need to claim on your tax return.

2 Responsesto “About Winning The HGTV Internet Sweepstakes”

  1. ocasiyo says:

    Are the winners notified before it is televised? Or is it a complete ambush?

    • admin says:

      I think you get notified, and the PCH only conducts the ambushes. I haven’t won either so can’t say absolutely.

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