Income Tax Consequences of Winning the HGTV Smart Home 2014 in Nashville, Tennessee

May 12, 2014


This year’s HGTV 2014 Smart Home Giveaway is in Nashville, Tennessee. According to the HGTV contest rules, it comes with a home and furnishings valued at $1,085,240, $100,000 in cash, a $40,000 2014 Lincoln MKZ Hybrid, and a $695.88 ADT home monitoring service for a total value of $1,225,936.

Of course, the $100,000 in cash will come in handy because if you win the dream home, be prepared for a hefty federal income tax bill and, depending on where you live, a state income tax bill which I have estimated in this post (this analysis excludes the multitude 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).

Overall, the federal income tax bill alone comes to a whopping $421,056. If you plan on keeping this home, best be prepared to take on a second job or take out a home-equity loan to pay Uncle Sam as the $100,000 in cash won’t cover it.

Calculating the state income tax owed is much more complicated. Tennessee does not have a general income tax (though they do tax interest and dividends). As a result, your tax bill will be determined in your home state. Unless you are fortunate enough to live in Tennessee or one of the other 8 states that do not levy a state income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Washington, and Wyoming), then you will have a tax bill that is significantly greater than 0. We do not attempt to calculate the tax bill that would be owed if you live in the other 42 states.

Fortunately, HGTV does provide an escape hatch by offering $600,000 in cash in lieu of taking possession of the home. You also get to keep the $100,000 in cash and the $40,000 Lincoln for a total escape pot of $740,000. If the winner opts for this choice, they will take home at least $511,374 after paying federal income taxes of $228,626.

These numbers kind of makes you wonder who the real winner of this contest is--the contestant or the government? My suggestion would be take the cash-option money and run. One could outright buy a very, very nice home with the cash and have zero debt. If you have had your fill of paying taxes, you could mimic the Free-Staters and buy a house in the handful of America’s tax havens left (all in New Hampshire) where there are no state and local individual income taxes, no state or local sales taxes and very low (in some case no) local property taxes.

Or, if New Hampshire is not your style, you can check out the tax burdens in other states with our unique tax burden app which shows tax burdens by state, by type and over time. Also, the contest for the 2014 diy Lakeside Blog Cabinwill be announced soon and I will estimate the tax bill of winning that home as well . . . stay tuned. Also, check out our tax analysis of the recent HGTV Lake Tahoe Dream Home.

For those who might be interested, here is what Tennessee’s tax burden looks like via our tax burden app.


Category: HGTV

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.

Add Pingback
blog comments powered by Disqus

Stay Up-To-Date on Your State's Key Policy Data - Economics, Politics, Demographics - by Joining Our Mailing List Today!

Check Out Our Unique Apps:

U.S. Capitol.jpg

Government Workforce

Tax Squeeze.jpg

Tax Burden

Strings Attached to Federal Dollars.jpg

Federal Tax and Spend

Hundred Dollar Bill.jpg

Cost of Living (COLI)



Measuring a Dollar.jpg

Federal Tax & COLI


Federal Pension

United States Office of Personnel Management Seal.jpg

Federal Payroll

Check out more

Stories from our

Media Partner:

Check Out All Posts For Your State:

Alabama.jpg  Alabama

Alaska.jpg  Alaska   

Arizona.jpg   Arizona 

Arkansas.jpg  Arkansas

California.jpg  California

Colorado.jpg  Colorado

Connecticut.jpg  Connecticut

 Delaware.jpg  Delaware

Florida.jpg  Florida

 Georgia.jpg  Georgia

Hawaii.jpg  Hawaii

  Idaho.jpg  Idaho

   Illinois.jpg  Illinois

   Indiana.jpg  Indiana

  Iowa.jpg  Iowa

  Kansas.jpg  Kansas

  Kentucky.jpg  Kentucky

   Louisiana.jpg  Louisiana

   Maine.jpg  Maine

  Maryland.jpg  Maryland

Massachusetts.jpg  Massachusetts

Michigan.jpg  Michigan

Minnesota.jpg  Minnesota

  Mississippi.jpg  Mississippi

Missouri.jpg  Missouri

Montana.jpg  Montana

Nebraska.jpg  Nebraska

Nevada.jpg  Nevada

New Hampshire.jpg  New Hampshire

New Jersey.jpg  New Jersey

New Mexico.jpg  New Mexico

New York.jpg  New York

North Carolina.jpg  North Carolina

North Dakota.jpg  North Dakota

Ohio.jpg  Ohio

Oklahoma.jpg  Oklahoma

Oregon.jpg  Oregon

Pennsylvania.jpg  Pennsylvania

Rhode Island.jpg  Rhode Island

South Carolina.jpg  South Carolina

South Dakota.jpg  South Dakota

Tennessee.jpg  Tennessee

Texas.jpg  Texas

Utah.jpg  Utah

Vermont.jpg  Vermont

Virginia.jpg  Virginia

Washington.jpg  Washington

West Virginia.jpg  West Virginia

Wisconsin.jpg  Wisconsin

Wyoming.jpg  Wyoming