Extreme makeover-home edition and tax consequence

Generally, if you win money or prizes on a game show, the money or the cash value of the prize is taxable to you on your personal income tax return. Extreme Makeover Home Edition is a little different. That makes those crazy improvements they do tax free! For example: when you watch the show, you see them putting up one home.

Another issue that they have to settle before a family is selected is the mortgage. Michelle and Jesus Jacobo took in Michelle's five nieces and nephews when her sister lost custody of them. Michelle's father moved in at the same time to help the couple take care of the nine children under their care, as noted by Kevin Green Homes.

This renovation, however, doubled the property taxes for the home and was expected to increase the utility and insurance bills. To help the family keep afloat financially, a fundraiser was organized by a local homebuilder Kevin Green. It is unknown to the public if the Jacobo family has been able to keep up with the significant increases in bills.

Sadie Holmes struggled with cocaine and heroin addiction for 17 years. Eventually, Holmes regained custody of her five children after she turned her life around and got clean. Holmes ran her nonprofit from her home, which was sadly destroyed in by four hurricanes and a house fire and had not be insured, as reported by the Orlando Sentinel. The crew rebuilt the home and transformed the square-foot home into a mansion with office space to serve as the base of her operations for her nonprofit organization.

In addition to the new home, the show's producers secured property tax payments and insurance coverage for Holmes. Unfortunately, the cost of running her nonprofit became too great for Holmes to keep up with. Other expenses include the organization's truck insurance and gas, office supplies, and home upkeep. An attempt to sell the home was made, but it didn't work out.

Notably, the home's location in a neighborhood with "barbed wire and junked cars" severely inhibited the house's marketability, as reported by the Orlando Sentinel. No offers were made for the house, and it was foreclosed on in If you or anyone you know is struggling with addiction issues, help is available. Larry and Melissa Beach raised and fostered over 85 children, according to the Houston Chronicle. After Hurricane Ike destroyed their family home, the couple found themselves living with 15 children in a single family FEMA trailer.

The crew built an eight-bedroom home with enough space for the couple and the children to live comfortably, as reported by the Houston Chronicle. Soon after the home was built, however, the couple lost their 2-year-old daughter, Mercy, after she suffered a seizure.

Larry and Melissa decided that they would no longer participate as foster parents. As the older children grew up and left the house, the couple found the increasing property taxes too much for them to keep up with. The community put a lot into this house and that's really the conflict we have struggled with," Larry told a reporter in The Simpson family had to sell their new home YouTube.

The Nicklesses had mortgage problems Lansing State Journal. The Hebert family's bills tripled after their makeover YouTube. When I first heard about a free house going into foreclosure, I was confused.

I figured the families must have squandered their money away on frivolous cars and luxuries. How could you lose a house that was given to you? Well it's a little more complicated than that. Because most of the families on the show are barely scraping by, any new expense can put them over the edge. When their taxes and utility bills are doubled, tripled, even quadrupled, they simply cannot keep up. In , the Harvey family was given a spacious 4, square-foot house, but the bank auctioned it off six years later.

This pattern became common with many former guests of the show, who took mortgages out on their new, expensive homes to pay off old bills or start new ventures. It's hard to say where the fault lies.

Should ABC have given families smaller homes, or should the families have not accepted the mansions? The St. Augustine Record reported the show built a six-bedroom, seven-bath mansion for a family of four, which many would say is more house than they ever needed.

In addition to the doubled or tripled power bills, brand new makeover houses come with higher tax bills as well. Perhaps fortunately for the families, the reality show helped them in some creative ways.

Endemol, USA , the company behind Extreme Makeover: Home Edition , did some serious acrobatics to help the families avoid paying taxes on their makeover. An IRS loophole says if your home is rented out for less than 15 days per year, you do not need to pay taxes on that rental income. With that in mind, the show explains to families that they are "renting" the house from the family for a week, and the improvements are the rental payment, meaning they don't have to pay taxes on the improvements.

While this plan helps families upfront, they'll still be responsible for the future property taxes that will undoubtedly rise with the increased value of their home. It's hard to imagine a scenario where you would actually sue the people who built you your dream home for free, but it happened in Extreme Makeover: Home Edition built a house for the Higgins family, five orphans who had lost their parents to cancer and heart failure.

The home was built for them and the Leomitis family who had taken them in. The show built them a nine bedroom mansion and even provided new cars and groceries, but after the cameras left, things got ugly. According to the Higgins children, the Leomitis family launched " an orchestrated campaign " to force them out of the new mansion. The family allegedly used racial slurs, verbal abuse, and physical abuse to drive out the orphans.

The Higgins children moved out and promptly sued ABC, stating they were promised a house which is not in their name. Though ABC did not make an official statement on the case, they did remind fans the show was intended to build a home for the Leomitis family, who had taken in the orphaned kids. For Extreme Makeover: Home Edition families, life hasn't been easy. They have dealt with truly tough circumstances, and those can weigh on you.

And sure, a brand new house can change your life, but it can't fix everything. That was certainly true for Debbie Oatman, who received a brand new 3, square-foot home for her and her children. Oatman is the single parent of four boys, three of whom are adopted and two of which have HIV and special needs.