Tom Kelly: Home raffles, essay contests a tough sell

You’ve reduced your home’s price – twice – yet still no takers.

You’ve painted the exterior, purged all unnecessary items in the kids’ rooms and prodded your agent to bring you more potential buyers.

But trying to unload your home by selling raffle tickets or starting an essay contest?

Think again.

According to the Washington State Gambling Commission, any activity that includes “prize, chance and consideration” is gambling and must be properly licensed and regulated. Typically, raffling off a house would be prohibited because it is based on chance.

A lottery is similar. Some skill may be involved in choosing the numbers, but it’s mostly chance or luck.

The essay contest has been an alternative road to raffling off a home. (“For $250, state in 300 words or less why you want to live in Rolling Bay”) The controversial step behind the essay contest is proving the contest was totally based on skill, not chance. Who are the judges? How were they chosen?

Another critical piece to the puzzle is the tax question. Would the Internal Revenue Service consider the house a “gift” and thereby taxable to the winner? A real-estate tax attorney said the “gift” question was definitely a gray area that would probably be up to a court to decide. If it were not a gift – if there was no gratuitous intent – then it would be taxable to the person receiving the home. It would be taxed as ordinary income.

The raffle concept usually is more acceptable to some state’s officials when a non-profit is involved. For example, the California State Attorney General’s office, has approved one program and has a 60-page document outlining the requirements for non-profit home raffles.