What is CA state and federal tax liability on $2.38 million house won in raffle?
The value of the house will count as ordinary income, so you’d pay 35% of the value for federal taxes, plus state taxes in the highest bracket. Expect the tax bill to come to somewhere around 50% of the $2.4 million figure. So figure about $1.2 million in taxes. Since you’d own the house free and clear you could take a mortgage against the house for $1.2 million which would only be a 50% loan to value. Any bank will do that, but you’d need a big income to make payments on a $1.2 million loan, so unless you’re a doctor you’d soon be foreclosed on. If you have the income, you could get a $2.4 million dollar house with only a $1.2 million dollar loan, and the interest would be tax deductible. The better option would be to sell it. Use the money from the sale to pay the taxes and you’d walk away with somewhere around a $1 million in your pocket. If you get lucky, you should hire a very experienced tax attorney. You’re talking about over a million dollars worth of taxes in this situation, s
