Originally Posted by jshaye
Hello. In 2014 I was awarded a house said to be worth $75,000. I wrote an essay and had a series of interviews and I was the person they chose. I do not officially own the home yet but I am currently "acting owner". I pay all property taxes & keep up with maintenance. In 5 years I will be given the deed to the home. Per my contract for that to happen, I was required to keep up maintenance, property taxes, complete a finance/savings class & a home owners class. My question is, once this house is given to me & I officially own it, will I have to report the worth of the house as "income" when I file?
Since you win a house in a contest, you'll owe taxes on that house in the year in which you formally take title on its value. Also, depending on your state, you may have to pay state income tax on any house you happen to win in a contest. Under IRS rules, any prizes won in contests are taxable at the marginal tax rate. Under marginal tax rates, you're taxed on every additional dollar of income. The IRS looks at houses won in contests as additional income.you need to report it on 1040 line 21 as other income