Congratulations! You Now Owe The Government $1,000,000!

I just watched somebody else win my HGTV Dream Home in Sonoma, CA (we took pictures in January), and I'd just like to say "Congratulations, Cheryl and Joe Smith of Lakeland, FL, you now owe the Federal and State governments about $1,000,000, not to mention about $30,000 a year in property taxes!"

Why? The Dream Home package is valued at $2 million dollars. At current tax rates (more if Obama gets his way) an income of $2 million (and this is considered ordinary income) will result in a federal tax bill of around 36.9% and a California state tax bill of another 10% or so. Property taxes in Sonoma will probably add about $30,000 per year. Since there's no cash included in the prize package the winner will have to choke that up themselves.

If the winner isn't loaded, look for a "For Sale" sign to appear in Sonoma pretty soon.

By the way, we were up there last weekend and drove by the Dream Home. The house next door is up for sale for just under $2 million, and just down the street are some other amazing homes, including a compound that covers a couple of square blocks and has at least four homes or other buildings on it. There are also a lot of empty lots back in that neighborhood. It's either mansion or famine.

The Dream Home itself is located on the edge of the fancy neighborhood, and across the street from some very average homes. I'm kind of surprised they chose that lot when so many better locations were available close by.

Oh well, there's always next year.