Extreme makeover 450K free home, foreclosing?

[Cutehumor]

Apparently, in cobb county, GA. a family got a free 450K free home built for them in 2005 plus 100K cash from a show sponsor. The family took out a second mortgage and are threatened with foreclosure from Chase. The money used was for a "business". PRICELESS!

http://www.wsbtv.com/news/16980412/detail.html

 

[OVERKILL]

I guess that's a lesson in how not to manage your money? Makes you question how "deserving" they were of the new home in the first place though....... Taking out a mortgage on the entire value of the house to start a random business with no guarantee of it's success? How were they living before this?

 

[Gary Allan]

Well, let's look at it this way ..if they had succeeded ..they would be heroes and celebrities ..news bites....talk show hosts ..would all herald them as champions of the American spirit. They took the risks and deserve all the bennies ...blah-blah-blah.


..but falter in that effort ..and they're just some dumb shmucks that blew it.

 

[GROUCHO MARX]

Originally Posted By: Gary Allan
Well, let's look at it this way ..if they had succeeded ..they would be heroes and celebrities ..news bites....talk show hosts ..would all herald them as champions of the American spirit. They took the risks and deserve all the bennies ...blah-blah-blah.


..but falter in that effort ..and they're just some dumb shmucks that blew it.

Yeah ,it's a lot easier to lose other people's money.

 

[Bob The Builder]

Bottom line is that they are still "schmucks." I bet they took that money out and are living off of it. I found out through further investigating...that they actually took out the 450k plus an additional 125k loan. There hasn't been any evidence of a "construction company" being started as they have claimed.

The woman stated to a reporter that "I take ma money and run wid it radder den payin fo duh lone cuz day be herassin me and ma famiwee to coweckt."....end quote.

 

[Cutehumor]

Maybe they will get bailed out with the new incentive package passed by Congress for those facing foreclosure. cha-ching again!

 

[OVERKILL]

Originally Posted By: Cutehumor
Maybe they will get bailed out with the new incentive package passed by Congress for those facing foreclosure. cha-ching again!


That thought made me throw up a little in my mouth.

 

[Bill in Utah]

When they get a "free" home, they own MAJOR taxes.

I'd bet they had to go and get a loan on the house to pay the taxes and could not afford it.

Most of the time the "needy" people that these shows select can not afford a home (which may be the reason why they don't have one in the first place)

and even more, they do not need to pay full retail for all the upgraded "stuff" that they put in these homes.

Plus the IRS gets lists of FULL RETAIL plus that they base the taxes on.

I'm a pilot and every year AOPA gives away a plane. If I won it

, I would have to sell it right away as I can not afford $200k in taxes or more.

Bill

 

[firemachine69]

Quote:
What’s going to happen is instead of keep paying my mortgage, I’m going to take my money and not pay my mortgage because I’m being harassed,” said Harper.



Because that's the new american way! Money was never really borrowed, it was a given to me!

Can't make a 200K mortgage? ***? Two adults working full-time should not have any difficulties. You know, working 9-5, like the rest of the population that didn't get $850K (300K mortgage paid off, 100K cash, 450K house...) for sweet nodda.

 

[OVERKILL]

Originally Posted By: Bill in Utah
When they get a "free" home, they own MAJOR taxes.

I'd bet they had to go and get a loan on the house to pay the taxes and could not afford it.

Most of the time the "needy" people that these shows select can not afford a home (which may be the reason why they don't have one in the first place)

and even more, they do not need to pay full retail for all the upgraded "stuff" that they put in these homes.

Plus the IRS gets lists of FULL RETAIL plus that they base the taxes on.

I'm a pilot and every year AOPA gives away a plane. If I won it

, I would have to sell it right away as I can not afford $200k in taxes or more.

Bill


Bill:

From the sounds of things, they took out a 450K mortgage on the property to "start a business". This is what they are having a problem paying off. Or rather, from the sounds of things, REFUSE to pay on at all.......?????

 

[javacontour]

I dunno if anyone looked at the home or the story from back in 2005, so here is what I found:

http://realitytv.about.com/od/extrememakeoverhome/ss/HarperMakeover.htm

 

[eljefino]

Quote:

ABC leases participants' homes, paying $50,000 for the 10-day rental. But instead of paying the "rent" in cash, ABC treats the provision of flat-screen TVs, applicances, etc. in the home-makeover as the rental payments. The ABC tax lawyers believe this makes these amounts exempt from tax under Code section 280A(g), which excludes income derived from short term rentals of a home for less than 15 days. Why didn't I think of that back in 1990!?!

Newsweek contacted 6 "outside tax professionals": "While some called it clever -- even 'elegant' -- most scofffed at the show's approach, saying the IRS would be highly unlikely to agree with all aspects of it."


link

So in arguable theory ABC is complacent with helping or trying to help the contestants around the taxes.

 

[Gary Allan]

Originally Posted By: GROUCHO MARX
Originally Posted By: Gary Allan
Well, let's look at it this way ..if they had succeeded ..they would be heroes and celebrities ..news bites....talk show hosts ..would all herald them as champions of the American spirit. They took the risks and deserve all the bennies ...blah-blah-blah.


..but falter in that effort ..and they're just some dumb shmucks that blew it.

Yeah ,it's a lot easier to lose other people's money.


Oh, I agree. One of the biggest losers was a winner of the PA lottery. All his relatives opened losing businesses with him providing the up front capital ..some of it borrowed (by him) since he had the annuity income to handle the loans.

I think if you give it an honest evaluation ..not too many people, regardless of intelligence (not to be confused with wisdom), would be "content" to get a heavily discounted house and merely sit on it and enjoy the avoided costs. We've got a whole segment of our society that bought in on an upswing in housing and merely cashed in their equity as it appeared ..paying off (or expanding) their consumer debt along the way. Many of these were upscale and educated ...and merely one merger, acquisition, or downsizing away from bankruptcy.

..but they can surely just be idiots let out of a cage and who immediately did everything they could to put themselves back into one.

 

[ToyotaNSaturn]

Yes, they refused to pay, they're taking the money & running. To them it's nearly half a million in free cash. Good riddance to these selfish [censored].

I like watching the Extreme Makeover show, most people are TRULY blessed by what's going on. However, this family is a blood sucking entity that deserves to live in a cardboard box in upper Mongolia for a few years to realize how good they had it.

Maybe Extreme Makeover can send them a box from a refrigerator for them to live in? The outside of the box will say "This home brought to you by Sears and Beazer homes, now [censored] off [censored]!"

 

[ToyotaNSaturn]

Originally Posted By: Gary Allan


..but they can surely just be idiots let out of a cage and who immediately did everything they could to put themselves back into one.


AMEN! Quote of the year!!!!

 

[2002 Maxima SE]

Originally Posted By: OVERK1LL
Originally Posted By: Bill in Utah
When they get a "free" home, they own MAJOR taxes.

I'd bet they had to go and get a loan on the house to pay the taxes and could not afford it.

Most of the time the "needy" people that these shows select can not afford a home (which may be the reason why they don't have one in the first place)

and even more, they do not need to pay full retail for all the upgraded "stuff" that they put in these homes.

Plus the IRS gets lists of FULL RETAIL plus that they base the taxes on.

I'm a pilot and every year AOPA gives away a plane. If I won it

, I would have to sell it right away as I can not afford $200k in taxes or more.

Bill


Bill:

From the sounds of things, they took out a 450K mortgage on the property to "start a business". This is what they are having a problem paying off. Or rather, from the sounds of things, REFUSE to pay on at all.......?????


I'll add that property taxes on a 450K house should be around 4-5K. On top of the house, they were given 100K dollars. That should have been more than enough (working minimum wage jobs and saving) to make ends meet.

 

[Gary Allan]

Originally Posted By: 2002 Maxima SE
Originally Posted By: OVERK1LL
Originally Posted By: Bill in Utah
When they get a "free" home, they own MAJOR taxes.

I'd bet they had to go and get a loan on the house to pay the taxes and could not afford it.

Most of the time the "needy" people that these shows select can not afford a home (which may be the reason why they don't have one in the first place)

and even more, they do not need to pay full retail for all the upgraded "stuff" that they put in these homes.

Plus the IRS gets lists of FULL RETAIL plus that they base the taxes on.

I'm a pilot and every year AOPA gives away a plane. If I won it

, I would have to sell it right away as I can not afford $200k in taxes or more.

Bill


Bill:

From the sounds of things, they took out a 450K mortgage on the property to "start a business". This is what they are having a problem paying off. Or rather, from the sounds of things, REFUSE to pay on at all.......?????


I'll add that property taxes on a 450K house should be around 4-5K. On top of the house, they were given 100K dollars. That should have been more than enough (working minimum wage jobs and saving) to make ends meet.


Somewhat true. It would be rather odd living in a $450k house and eating macaroni and cheese and driving a 91 beater ..or so I would think.

They should have sold the house and bought down ..paid the capital gains and lived a "smaller large".

 

[Drew99GT]

They probably had to take out the mortgage to pay the income taxes on the house. They had to pay income tax on whatever the value of the home was.

Kinda like those Pontiacs Oprah gave away - half the people had to sell them to pay the income tax!

Oh, and when they sell the house, the cost basis is 0. Capital gain out the wazoo. Before, the producers of that show were trying all kinds of bee ess for tax purposes - leasing the home for 14 days and constituting the building of the home as "rent payments" for tax purposes - that would be non taxable since they considered the home a rental (under a certain IRS provision). The IRS in 2006 said NOPE - the value of the home is gross income and cost basis for capital gain when the home is sold 0.

Extreme Makeover did an episode east of CO Springs and those people had to sell because the income taxes and the property taxes.

If you can't afford a home, YOU CAN'T AFFORD A HOME! Whether you get a rediculous mortgage or the home is given to you.

 

[Gary Allan]

About the only way they could manage it would be to hold the mortgage on the house and not require any payment. Loan them the money for the income taxes ..and allow them to default on it with no penalty or recourse. I think that the IRS would figure some way to tax that too.

 

[twentynine]

Man I been thinking about this all day.

This is a perfect example of irresponsibility, and stupidity. If I read the article correctly, they recieved a $450,000 home, $100,000 cash and had their outstanding mortgage paid off. And you guys are telling me they couldn't use the 100k to pay taxes. That by itself is ignorant.

And what about this statement made by the homeowner.
“What’s going to happen is instead of keep paying my mortgage, I’m going to take my money and not pay my mortgage because I’m being harassed,” said Harper.

My blood is boiling, I'm gonna pop a stroke. Dang, when I was trying to buy my home and pay school tuition, college tuition for my kids. If somebody bought me a burger at BK I'd be so gratefull it was rediculous.

If my calculations are right, using the over $600,000 spent on these stupid people, atleast 10 modest homes could have been built for HOMELESS families. Using a program such as Homes for Humanity. Instead the money was wasted on [censored] fancy smancy place for people who evidently didn't know how to be thankfull.

Bill yes I understand that they owe MAJOR tax money. But think about it, they were already paying a mortgage on the previous home. They got $100k CASH. I figure 30% total on value of the home income tax that's like $120k. Plus property tax say another %10, that's $45k. Okay now added together that's a total of $160k. Now subtract the $100k cash they got. That leaves a total of $65k owed in taxes. Okay so I am a little low, bump it up to a total of $200k, that only leaves a grand total of $100k.

Stupid goes all the way to the bone.

Java I read your link also. So why is it I should feel sorry for them buying a home that was/is a dump. They didn't take care of their business, home inspections whatever. The child dying, I can't imagine the pain, but that is a seperate issue.