Are you working three jobs, or one job for 140 hours a week, just so you can become a Real Bay Area homeowner? This Labor Day, why not just win an RBA house instead? Burbed reader Divasm informs us of a charity raffle where this Menlo Park house is first prize. The raffle tickets are $150 each, and yes, there is a quantity discount.
First of all, does anyone know where this house actually is? All the raffle site would say was “Central Menlo Park” and “leisurely stroll to downtown.” Perhaps one of our readers recognizes this 2006 Georgian joint. Send it in and we’ll add more details about the home, but for now we’ll tell you it’s a 5 BR/5 BA and just under 5 thousand square feet (which means it missed it by that much on the ginormous tag) on a 10 thousand foot lot. Plus the mawbul kawlums!
Second, did you know if you buy a raffle ticket like this, even though it’s for a legitimate charity, it is not tax-deductable? To be more specific, it is not tax-deductable unless you actually win something. Then you can offset the prize income with what you spent on the raffle tickets.
And finally, in trying (unsuccessfully) to locate the house, we came upon this older SF Gate story about house raffles. It turns out that raffle prize homes are usually not claimed. Winners usually prefer money instead of the house, so the first prize is not usually owned by the charity. The actual owner usually leases it to the charity, with an option to buy should the winner prefer the house instead of the suitcase full of cash.
Why do winners prefer the money over the house? If the prize is worth more than $5,000, get ready to fork over 25% of its value to the IRS. So if you won this house, supposedly worth $4.1 million, you’d have an instant million dollar Federal tax bill before you can say “clear title.”
But wait, there’s more! Winning this house also means you’d have to pay closing costs. And property taxes. (That’s another $44,000, at least.) And they’ll probably stick you for the transfer tax as well.
Now what would you pay? Because if you don’t live in California, and you win a raffle like this from a California charity, then state income tax gets withheld off the top as well. You’re supposed to pay it even if you do live here, but it won’t be withheld up front if you’re already an RBA resident.
So maybe you’re thinking, “Hey wait, I’m sitting in this non-RBA underwater house! Why don’t I raffle it like these charities do?” Sorry. That’s illegal. Private owners and commercial enterprises cannot run raffles. Charities couldn’t either, until Prop 17 passed in 2000. And the charity must register the raffle with the Attorney General’s office.
Or maybe not. The article is 3 years old, and there aren’t any raffle registrations beyond 2010 on the AG’s site. With all those budget cuts, maybe you can get away with raffling your house after all!
And if not, enjoy your Labor Day. We’ll be back tomorrow with more ridiculous realty.
Update: Thanks to Burbed reader Petsmart Groomer, we now know where the house is! Thanks very much!
3 Patricia Pl
Menlo Park, CA 94025
$3,999,999; listing removed 7/1/12
Lot: 10,890 sq ft / 0.25 acres
Type: Single Family
Year built: 2006
Parking: Garage – Attached
Rent Zestimate: $8,161/m
DELIGHTFUL PROPERTY ON A PERFECT MENLO PARK LOCATION: Elegant and classic home in prime Central Menlo Park- Built in 2006 5 Bedrooms / 5 Bathrooms on 4, 961 SqFt – Size Lot 10, 800 SqFt Three levels with 4 bedrooms on 2nd floor Media Room – Wine cellar – Exercise room – Office – Laundry Room 5th bedroom and bath on lower level Graceful circular staircase – Brazilian cherry floors – OPEN HOUSE SATRUDAY JUNE 9, 2012:1:30PM – 4:30PM