I won a $1.2m coastal castle-like house from HGTV- I ended up owing $400k in taxes but there was a t

IN a sad twist of events, a couple who won the HGTV Dream Home sweepstakes has been left with a $400,000 tax bill. The couple, who are both retired state employees had to give their HGTV Dream Home away.

IN a sad twist of events, a couple who won the HGTV Dream Home sweepstakes has been left with a $400,000 tax bill.

The couple, who are both retired state employees had to give their HGTV Dream Home away.

The thought of winning a big prize, whether it be millions of dollars on a lucky lottery ticket, or a grand prize sweepstakes giveaway, is a happy one.

However, it doesn't always come with a happy ending.

Just ask Sacramento, California couple, Kathi and Donald Nakao, who won the ultimate prize in a HGTV Dream Home Giveaway in 2004.

The HGTV Dream Home giveaway is an annual sweepstakes where a luxury home and other prizes estimated to be valued at millions of dollars are given away.

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The popularity of the giveaway has continued to grow since its first free home, a stunning log cabin-style abode in Jackson Hole, Wyoming, was released in 1997.

The first giveaway received about 1.25 million entries, however, competition has blown up in popularity in recent years.

For instance, the latest 2023 sweepstakes had 128 million entries, making it one of America’s biggest and most popular giveaways.

The Nakaos' prize in the early years of the sweepstakes included a completely furnished, 3,000-square-foot vacation home with a boat slip on the coast of St. Mary's Georgia.

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They were also gifted a new car.

The couple was then hit with the $400,000 gift tax bill.

According to the Press Democrat, the couple turned to an accountant for financial advice, who told them to buy some time and enjoy the house as long as they could,

They then put the house up for sale.

In a positive twist of fate, the couple was able to sell the home for well above the $1.2 million value of the home HGTV gifted them.

The couple used the money to remodel their own home.

They even incorporated some of the design details from their Dream Home into the remodel and turned their old home into a smaller seaside cottage, according to the same source.

What happened to the Nakaos isn't uncommon.

Winning a contest, such as the HGTV Dream Home giveaway, is treated as income by the US government.

Winners are required to pay taxes on their winnings - the same way they pay taxes on a paycheck that gets deposited into your bank account.

HGTV is open about this in the game rules on its website.

For instance on the game rules page for the 2023 Dream Home Giveaway, HGTV says: "All costs, taxes, fees, and expenses associated with any element of the Grand Prize not specifically addressed above are the sole responsibility of the Grand Prize Winner.

"All federal, state, and local taxes on the Grand Prize are Grand Prize Winner’s responsibility. The Grand Prize Winner will be issued a 1099 tax form for the actual value of the Grand Prize."

The amount owed could exceed forty percent of the total value of the package.

For instance, a former preschool teacher won the 2019 the HGTV Dream Home prize home in Montana estimated to be worth $2.5 million dollars.

The total taxes on that win were estimated to be over $900,000 – something most people cannot afford to pay immediately.

A former preschool teacher won the luxurous home with mointain views.

According to Country Living, only six of the first 21 winners of HGTV's annual dream home giveaway were able to reside in the home for more than one year due to the large tax bill.

Most winners wind up flipping their home quickly to pay off the tax bill.

The 2019 HGTV Dream Home winner, Beverly Fulkerson, was given the option of a prize package without the house of over $1million, including $750,000 in cash and other prizes.

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The option still came with a tax bill of over $300,000.

Knowing that most winners are unable to keep their prizes, HGTV has started offering a cash option in leu of the home.

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