TIPS ON SELLING YOUR MILLION DOLLAR LOTTERY HOME (IF YOU EVER WIN ONE)

Trying to sell a million dollar lottery home is a unique situation to be in. So we asked former winners, as well as real estate and tax experts, what advice they would have for anyone who wants to exchange their fancy new dwelling for cash.

PREPARE TO BE LOWBALLED

Several of the winners interviewed said some of the first offers they got on their homes were well below the value. Since the house was won, not bought, some winners, speculated the prospective buyers, assumed the sellers were eager get the home off their hands and collect the profit.

“I think at first we listed it I think for $ 1.2 million, which is what it was valued at, and then we got some offers for like 600,000,” said 2013 winner Joely Fuchs.

KNOW THE VALUE

Although lottery organizations will say their grand prize home is worth $1 million, that number doesn’t necessarily reflect the current market value. And of course, the market is always changing.

“The lottery may have a stated price or cost associated with the home. That doesn’t necessarily mean that’s the value in the marketplace,” said Gord Archibald, executive officer with the Association of Regina Realtors.

So to be sure you know what the home is actually worth, and talk to a professional who can estimate its value.

BE PATIENT

High-end homes typically take a little longer to sell. There’s also currently an abundance of them in Regina’s real estate market.

“Right now there’s an oversupply, or I should say listings are a 20-year-high. So there’s a lot of product out there in the market right now,” said Archibald.

As of the end of September, only 24 homes worth more than $750,000 have been sold in Regina this year, according to Archibald. The demand is simply smaller, so getting a good offer might take longer.

“If they’re prepared to sit on it they may eventually get a price that they’re looking for,” said Archibald.

BEWARE THE TAX MAN

Although lottery winnings aren’t taxable in Canada, the owner of a lottery home may have to pay a capital gain tax after they sell the house.

Capital gain is the profit resulting from the selling of a capital asset (such as a house). So if the house is sold for more than it was worth upon taking ownership because of market changes, the rise in value would be considered a capital gain.

“If you did have an increase in value you would be expected to recognize the capital gain, so 50 per cent of that increase in value would go into your income to be taxed,” said Jeff Hansen, a tax manager at Virtus Group in Regina.

There is however a way to avoid the tax through the principle residence exemption, but only if the owner can prove the home was their primary residence

“So if you can make that argument that yeah you were living there for a period of time and then you sell it, then you could theoretically use a principle residence exemption to even absorb that appreciation over that time,” said Hansen.

But Hansen said moving into a home for six months and then selling it is less likely to qualify the seller for exemption.