Can I Raffle My Condo?

[PEERless]

I have seen a few instances of people raffling off their homes. In most cases, the homeowner sells several thousand raffle tickets for $50-$200 apiece. The only examples I can find were done abroad, so I haven't seen an American precedent. US raffle laws were already brought up in this thread, and it seems that (in Idaho, at least) they must be conducted by a charity or nonprofit.

As you know, I've got a great condo chomping on my wallet. But it would be a great income property to someone who won it in a raffle for $50! And I could sell more tickets than it's worth to reap a tidy profit. Thoughts?

 

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[MJ DeMarco]

I think you have to call it a "lottery", and not a raffle. And lotteries are prohibited in the US unless you remove consideration, at which point, it becomes a sweepstakes.

Can a for-profit business or individual run a raffle?*|*Raffle FAQ

 

[AroundTheWorld]

It is possible. Laws vary greatly from state to state. There are people in the states that have done it successfully. Very good chance that you will have to partner with a non profit. While most states will say that the charity need to conduct the raffle, many states do not have a restriction regarding how the partnerhsip is split - - - or how much the charity can / must pay for the asset.

one example of someone int he states is : We Care and Friends Charity House Raffle - Win a million dollar custom home in Maryland for $50.00!!

Trick is:

Find a charity that you can work out a deal with
You will have to find an attorney that specializes in gaming law to write up your "stuff"
You will likely need to set a minimum and maximum number of tickets to be sold
Then, sell, sell, sell!

We are actually getting geared up to do this and have been spending a lot of our time over the last month working with an attorney and contacting several charities.

There is a bill in front of our house that could really impact our ability to sell tickets. Should know in another week or so. The bill will restrict ticket sales to within the confines of the state. This means.... no internet sales.

AARRGG.

 

[AroundTheWorld]

Oh, and one more thing.

Gaming (which this falls under) is highly regulated - but the key to making it happen

is to ask "How can I?" rather than "Can I?"

 

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[williell]

I know a non-profit that just got a gaming license in Canada, the non-profit can help you raffle the house for a small amount of the earnings. Please PM me and we can find something that works, I know that the non-profit would also take care of advertising, and we can get this done fast.

 

[AroundTheWorld]

That wouldn't work in Montana - the Charity must be a Montana charity.
But... like I mentioned before... it is very different from state to state.

 

[Analyzer]

I know a non-profit that just got a gaming license in Canada, the non-profit can help you raffle the house for a small amount of the earnings.

not sure how well that would work, all the casinos in vegas would be partening with non-profits if that meant cutting the tax bill

 

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[williell]

The property is in Idaho, that doesn't mean that someone in Canada can't get control of it and then raffle it that way. There has to be a creative way to get it done. I'll look into this more tonight.

 

[williell]

How would you raffle a time share with the right to assign and renew after 99 years

 

[I85]

I have seen a few instances of people raffling off their homes. In most cases, the homeowner sells several thousand raffle tickets for $50-$200 apiece. The only examples I can find were done abroad, so I haven't seen an American precedent. US raffle laws were already brought up in this thread, and it seems that (in Idaho, at least) they must be conducted by a charity or nonprofit.

As you know, I've got a great condo chomping on my wallet. But it would be a great income property to someone who won it in a raffle for $50! And I could sell more tickets than it's worth to reap a tidy profit. Thoughts?

If you're sure you can generate a profit, then I say get in touch with your attorney general and some charities. See what you can put together. I wouldn't even worry about keeping the profit. Getting out of that property and stopping the bleeding would be my main concern.

Obviously if you can make money, that is great! But if you can't, oh well. At least you will be out of the property and have your money back.

Also, if your property does generate a profit and it is goes to charity...is that considered a donation even though the charity had to work for the money?

 

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[kurtyordy]

these could really backfire on the winner. Imagine if you make 50k a year and bought a $50 ticket and won a million dollar house. You then owe approx 500k in taxes. You can only hope to sell the house fast enough to pay the taxes.

 

[Jill]

these could really backfire on the winner. Imagine if you make 50k a year and bought a $50 ticket and won a million dollar house. You then owe approx 500k in taxes. You can only hope to sell the house fast enough to pay the taxes.

500K? What's this property worth anyway?

 

[kurtyordy]

500K? What's this property worth anyway?

I was referring to the ATW story posted about winning a million dollar house.

 

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[AroundTheWorld]

Yea... taxes do become an issue for the winner...

I wonder.

Could they refuse? If so, what happens to the house?
Could they just turn around and donate the house to a charity?

 

[Jill]

Yea... taxes do become an issue for the winner...

I wonder.

Could they refuse? If so, what happens to the house?
Could they just turn around and donate the house to a charity?

They couldn't donate what they don't own. And if they take ownership, they owe the taxes on it. Right? If they did that, then it would be a wash, right? Where's Diane when ya need her!?

 

[kurtyordy]

They couldn't donate what they don't own. And if they take ownership, they owe the taxes on it. Right? If they did that, then it would be a wash, right? Where's Diane when ya need her!?

If they take it they would owe taxes. Best option IMHO would be to auction it right away. Then this would establish true value to be taxed upon, and you would have the cash to pay the taxes.

 

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[yveskleinsky]

I would think if you win a house, there would be a full disclosure of taxes, insurance, utilities, etc. If you didn't want it, you could always turn around and sell it, as you now own it free and clear. Worst-case you take out a HELOC to pay the taxes and other misc expenses until it sells. I would think the winner would still come out ahead.

 

[AroundTheWorld]

If they take it they would owe taxes. Best option IMHO would be to auction it right away. Then this would establish true value to be taxed upon, and you would have the cash to pay the taxes.

In MT,an appraisal is required prior to selling tickets. I assume this determines the taxable "value" for the winner.

 

[kurtyordy]

In MT,an appraisal is required prior to selling tickets. I assume this determines the taxable "value" for the winner.

I would think that would be the case, but the market is what determines true value. I would appeal it if their was a difference.

 

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[PEERless]

WOWOW! Thanks for the input! I'm going to find a gaming attorney next week.

 

[Inphinity]

A similar idea that was tried here recently, is buy tickets for a reverse-auction, or whatever you call it. Basically, the guy sold about 3000 tickets for $100 a piece for people to go to the auction, and the LOWEST, UNIQUE bid gets the house - with a maximum bid of $1000. So The highest you could possibly pay for the house is $1100 (unless you bought multiple seats), and they got $300k from the sales, even if the winning bid was 1cent.

However, last I heard it has been put on hold while internal affairs decide if this is actually a real estate auction or if it is deemed gambling.