What now?

October 8, 2006 9:50 AM

I've always wondered what happens after people are on shows like Extreme Makeover Home edition or Pimp My Ride. These people get amazing homes or cars, but now they have to pay for insurance/tabs? What's the likely hood of being able to afford that when all you could handle prior was a shack or beater car? Anyone ever looked into this?

I've looked for articles on this and haven't found anything. I realize in some instances people will get the mortgage paid off or insurance covered for some period of time on Ext. Makeover. But I would also think there's other consequences of having some beautiful custom home/car smack dab in the middle of a crappy neighborhood. Vandalism, jealous friends, theft?

posted by andywolf to grab bag (13 comments total)

I've looked for articles on this and haven't found anything.

Here's my own experience with Extreme Makeover, Home Edition from a previous AskMe.
posted by Civil_Disobedient at 9:53 AM on October 8, 2006 [2 favorites has favorites]

Usually eBay, for the Pimp My Ride cars. As blogged about by our very own mathowie. (Too bad Jalopnik's "permalink" is broken now.)
posted by smackfu at 10:15 AM on October 8, 2006

Income taxes are payable on the value of prizes. Shows either have to gross you up (i.e., give you cash about equal to the amount of the prize so that that cash, after you pay taxes on it, is enough to pay taxes on the prize), or you have to sell the prize to generate funds to pay the tax.

An important reason to sell cars immediately is that if you put the car for sale upon receipt, the IRS is likely to allow to value the car (for purposes of your taxable income) at whatever you can get for it when you sell it. If you drive the car around for a while, the IRS is likely not to accept your sale price as the fair value upon your prior receipt, and use some other metric, such as the absurdly high costs incurred by the people who customized the car. You could be looking at a crushing tax bill then.
posted by MattD at 11:03 AM on October 8, 2006

There was a group of brothers and sisters that were adopted by a Samoan family on EMHE and the Samoans got a new house of it. It was later revealed that the owning family teased and taunted the group they adopted in order to encourage them to leave the house. I'll look for the story. I don't know if they were ever compensated.
posted by parmanparman at 11:35 AM on October 8, 2006

The HGTV Dream house is up for sale http://money.aol.com/cnnmoney/realestate/canvas3/_a/the-house-that-swallowed-don-and-shelly/20060627161909990001 it is too expensive to maintain.
posted by Gungho at 12:07 PM on October 8, 2006

Civil_Disobedient... your comments were really interesting. I am glad to hear that the workmanship is so good on EMHE. The FOX competiter, Renovate My Family, hosted by Dr. Phil's son Jay, only lasted one season after an ugly lawsuit for shoddy and dangerous renovations.
posted by kimdog at 12:38 PM on October 8, 2006

As far as EM:HE is concerned, there are some interesting tax loopholes that are used to ensure that the homeowners don't have to pay exborbitant taxes. (I'm a tax dork, and I wrote a paper on the subject in law school). (This is coming from memory, but as far as I remember,) it involves a little-known provision that allows individuals to rent out their homes for up to 10 days per year, and the income from the rental is tax-free. In addition, improvements made to a home by a renter are tax-free up to a certain point. The producers use little tricks like these to ensure that the homeowners don't run into the same situation Oprah's guests did on the famous "free car" show.
posted by elquien at 2:00 PM on October 8, 2006

Elquien, I recall someone on the set mentioning something just like you describe: that is, the fact that the house goes "up" in under a week somehow factored into how they wouldn't get hit with the higher taxes.
posted by Civil_Disobedient at 2:27 PM on October 8, 2006

C_D: I found it interesting reading your comments about how they actually renovated in 5 days. A couple of years ago, a show (revovation Rescue, i think) did a house around the corner from me and although they claimed to have done it in 3, the street was closed for a week.
posted by cholly at 10:28 PM on October 8, 2006

Actually, the construction phase didn't even take 5 days. The specific timeline (I have the photos to prove it!) was:

Day 1: Arrive. Shoot stars meeting the family. Shoot interior "talk about what thsi means to you" shot. Get the family out of the house (that took two takes for us). When the family's on their way to wherever (Disney World, Bermuda, whatever), move their belongings out of the house.

Day 2: Begin structural disassembly of house. Gather volunteers, sponsors and stars and do the "Braveheart" shot (that's what they call it when everyone charges the house with pickaxes and other implements of destruction). Demo house for real.

Night: Clean site, prep new foundation walls.

Day 3: Begin structural assembly with existing foundation. All walls will be complete at day's end (including windowframes, but not windows) for section of the house under existing-foundation.

Night: Roof construction begins. Rest of the walls go up.

Day 4-Night: Now things start getting crazy. Roof waterproofing, shingling begins. Electricity, plumbing, etc. is installed. Interior masonry (fireplace) begun. Windows are starting to go in.

Day 5: Most windows installed by now. Flooring is in (not finished at this point, however). Roof-work ends, most work shifts indoors.

Day 6-Night: At this point there are at least 100 people inside the house working around each other: electricians, finishers, cabinet people, floor specialists, door hangers, plumbers, interior decorators... everyone is all trying to get their little section complete by daybreak.

Day 7: The contractors in the main groups responsible for construction have been working 72 hours straight at this point. Final finishing work done. Appliances and other goodies arrive, are quickly installed. Set up shot for "arrival" scene takes hours, which gives the crew inside plenty of time to finish. For the house I saw, the crowd stretched around two suburban blocks. There were thousands of people lining the streets up to their home.

Aftermath: Inevitably, there are some things they just don't have time to finish before the family gets home. That doesn't mean they won't complete that section, they just wait until everyone's gone home and things have cooled down. Then they finish it. I think they had people over there, on-and-off, for the next week after shooting. But it is my understanding that these were all fairly minor things—installing a vent hood, or putting in some sod (they had to basically replace the entire lawn of the guy next door).
posted by Civil_Disobedient at 7:52 AM on October 9, 2006 [2 favorites has favorites]

Elquien -- that's really interesting. I really wonder if the Service is going to buy that interpretation in the long run; I'd like to think that the producers gave the homeowners an indemnification in case the IRS denied the exclusion for the fair value of the improvements. (And I certainly hope that the producers had the homeowners fully disclose the transaction so that they'd just face a tax bill and not a evasion indictment if the Service goes the other way.)
posted by MattD at 8:40 AM on October 9, 2006

With regards to Extreme Makeover: Home Edition, elquien hit the nail on the head. Here is a link to a blog by a Tax professor on this very subject. (He may be citing from elquien's paper.)

There was a actually a Newsweek article that described ABC's tax position and then they had a couple of tax experts comment on that position. They seemed to feel that the position was shaky, but my guess is that the IRS hasn't audited any of these families. (This is similar to the argument the paper makes that is cited in the link above).
posted by bove at 1:30 PM on October 9, 2006

I seem to remember several families on EMHE getting large checks for "upkeep." Which, on the one hand, is awesome; on the other, if what I am reading is true, the TV station pays the upkeep bills, so I guess the family gets to keep the money[?], which is awesomer.
posted by starbaby at 1:48 PM on October 9, 2006