DREAM HOME: What will happen to my taxes if I win?

Local News

TOPEKA, Kan. (KSNT) – The Topeka St. Jude Dream Home will be given away to one lucky winner in August. However, tax experts said there are tax responsibilities people need to understand if they win.

Peggy Beasterfeld is a tax expert and the owner of Peggy’s Tax & Accounting in Topeka. She said it’s important for people to realize that winnings will be considered taxable income by the federal and state government.

“You’re going to pay tax on it,” Beasterfeld said. “We figured about 30 percent of what you win will have to be taxed state and federal.”

Beasterfeld said based on the estimated value of the home, it will place the winner in at least the 28th percentile in federal taxes and additional five percent in state taxes. That 33% adds up to an estimated $153,450 in initial income tax.

This will count towards the 2020 tax season. Beasterfeld said the winner should sit down with a tax professional. She said one option, for those with good credit, is to take out a mortgage on the home for the initial taxes.

If the county appraises the home for the full estimated value, Shawnee County Appraiser Steve Bauman said there will be also be $11,580 in annual property tax. This includes $3,135.68 in special taxes associated with the Lauren’s Bay Estates development, including paving, water, sewer and repair costs for a nearby pond.

Beasterfeld said none of this should stop people from buying a ticket. She said this is still an amazing deal, and more importantly, all ticket sales go to St. Jude Children’s Research Hospital.

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