Winning a luxurious home is supposed to be a dream come true — until the IRS calls! From
insurmountable tax burdens to a cozy bed and breakfast that was killed by
zoning restrictions, these Dream Home stories didn't have a happy ending.
Tina Carlson is known as the one Dream Home winner who held onto the property longer than
any of the show's previous contestants. However, she never actually got to live in the house. To
cover the outrageous expenses that a dream property incurs, Carlson rented it out for
seven years. She ended up borrowing against the value of the home to pay the taxes. From there,
Carlson paid the mortgage by renting it out to friends and acquaintances.
Renting a property out for the sole reason of earning income sounds like a profitable
game plan but it's a lot more complex than people realize. It comes with its
own set of taxes and expenses and eats away at the profits the passive income provides.
For Carlson, there was more than just the taxes from winning the house. As the owner of the 1998
"Dream Home," Carlson would have also incurred annual property and income taxes. When renting a
property, there are also all the complications of being a landlord, like maintaining the property,
paying for repairs, etc. Tina Carlson tried to make it work for many years — but she
eventually decided that it was just too much. She ended up selling the property as a result.
Belinda Brown was the third contestant to win HGTV's Dream Home in 1999. This meant
she didn't have years of stories to consider when deciding between
the property or the cash prize. However, Brown still decided to keep the property.
Presumably, Brown read about all the hefty tax burdens when she signed up for the show and was
aware that the free house came with a big price tag from the IRS. But she must have also thought
that the profits from renting out a "Dream Home" would cover the costs. Because shortly after Brown
decided to keep the home, she turned the place into a rental property. Sadly, two years later,
Brown was $300,000 in debt due to taxes, so she gave the home up. Brown told My Plainview:
"There's just no way, unless you're independently wealthy, that you can keep something like that."
Emily Muniz saw HGTV's 2018 "Dream Home" in the Washington area and fantasized about it since
her honeymoon. So, she and her husband dedicated themselves to entering the competition as often
as possible. After all, the show offered a chance to turn their dream destination into a reality.
"So, I saw the car, and I totally knew it was you guys."
However, winning was another story. At the time, Muniz was an executive producer of a television
show, a job that offered her far more financial stability than previous winners. And while she
discussed their decision with a financial advisor, there was more to consider than the expenses the
property posed. Ultimately there were too many sacrifices required to live out the dream.
The Muniz Family didn't want to tear their daughter from school
or leave their successful careers behind. While speaking to People,
Muniz described the experience of winning as surreal. And that's precisely what the home
ended up being for the family — a fantasy that couldn't quite become a reality.
In 2003, the Groszkiewicz family listened to HGTV executives explain
that the dream home isn't about living on the property — it's
about the opportunities that the property offers. So he visited the home a few times,
got incredible vacations out of the experience, and then decided to sell.
But even though the Groszkiewiczs quickly found someone to take the property,
the family's newfound wealth had a rocky beginning. After selling the house,
the IRS audited them not once but twice. As if filing taxes isn't hard enough,
going through an audit is a long and arduous process. Fortunately,
however, it all worked out. And in the end, John Groszkiewicz owed less than a quarter to the IRS.
Kathi Nakao was enjoying retirement life with her husband when she won her "Dream Home" property in
2004. It should've been the beginning of the picture-perfect final chapters in their lives.
Sadly, however, the reality was a lot different. Instead, Nakao found herself in significant debt
over the property despite almost 30 years working in accounting for the California
government. Because while it's true that a contestant wins a "Dream Home" without cost,
the U.S. still levies hefty taxes on gifts. And the 3,500 square foot
home's value was worth a second house in taxes. Nakao told The Washington Post:
"Ordinary people cannot keep a home like that."
The couple reported owing $400,000 to the IRS and
decided to sell before going further into debt. Fortunately, the house sold quickly,
so they were able to pay off the IRS before getting hit with any repercussions.
Don Cruz had big dreams for his dream house. In 2005, he saw more than a place for him and his
family to live — he saw an opportunity. Cruz was going to turn his new home into a lavish bed and
breakfast. Everything might have worked out if he'd won a decade later when turning residential
properties into vacation rentals became far more commonplace. The problem wasn't a lack of appeal
from guests. Cruz offered frequent tours of the home to fans despite never having guests stay at
his inn. But, sadly, the bed and breakfast never opened due to zoning requirements.
Still, Cruz wasn't deterred. Instead, he stayed at the home with his family,
connecting with the locals and taking advantage of the experience. When his dad was diagnosed
with cancer, he took out a mortgage on the house to cover medical expenses. In 2008,
however, the bank foreclosed on the property. It wasn't the ending he dreamed of, but Cruz believed
the win was worth the losses and recommended future contestants to live it up while it lasts.
In 2014, Laura Martin was so shocked when the camera crew showed up to announce her victory
that she famously said she almost peed her pants, according to The Newport Daily
News. Her entire family was thrilled for the opportunity to live out their fantasy in the
Lake Tahoe dream property. After peering inside the stunning home, there's no wonder either.
But Martin couldn't afford the tax bill that accompanied the
house. She explained to The Newport Daily News:
"I was completely ready to pack up and move to Tahoe to live in the house but Uncle Sam
[decided] that he [wanted] his tax cut and that was too cost prohibitive to retain the home."
The good news is the story wasn't all tragedy. Every year contestants are offered a lump sum
of cash, the home obviously, and some other prizes – like a vehicle – if they choose the
dream home. Otherwise, they can opt for a cash option which is less than the total
value of the home, but comes without all the tax burdens associated with receiving gifts.
So, Martin took the check and used that money to buy her family a dream home in Boise.
"We got a different dream. Yeah, we got a different dream. We got
more of an American dream than we would have ever expected."
A lot of Dream Home stories highlight the struggles that
contestants experience after winning the fantasy property. But for David Rennie,
the real tragedy happened well before he was revealed as the 2016 winner. One of Rennie's
friends from college announced his victory on Facebook before the network aired the episode.
"David, how are you feeling?"
"Just overwhelmed."
As a result, other contestants from the show had to learn that they didn't win way before
the show intended. Luckily for Rennie, the mishaps ended there. He decided to accept
the cash offer instead of the home. Florida Today reported that Rennie received $1.2
million which was less than the house's expected value of $1.7 million. However,
it also was a lot easier to accept. While winners can mortgage the house to cover the
one-time gift tax, they still must consider the annual property tax and maintenance expenses.
Beverly Fulkerson started watching HGTV in 1998 — four years after the network's creation. As
an avid fan of Dream Home, she applied to be on the show twice a day for many years. So,
in 2019, winning was a dream come true for the school teacher from Indiana.
"This is all surreal. I'm in shock."
But whatever happened to her? Fulkerson gushed to the network that she never thought she would
win. She talked about sitting on the porch or relaxing in the hot tub of her new home,
but that's where the story seems to end. There's a great deal of speculation over whether or not
Fulkerson ever enjoyed the view from her porch, as it seems someone is renting the property out.
As of April 2023, the 2019 "Dream Home" is a vacation rental on the website Rent by Owner.
Unfortunately, the site doesn't give any information on who made the listing. But
a quick review of the property records shows the house went up for sale in June
2019 and was sold three months later. So, Fulkerson definitely had a little bit of
time to enjoy the place before selling it. And considering the total taxes on
the home were $1.7 million, it was probably the right move for the preschool teacher.
Susan O'Gorman is one of the only contestants to win a property near
her current home. Her family's potential new home in Hilton Head,
South Carlina was only three hours away from her Perry, Georgia residence. O'Gorman was
also very familiar with her new neighborhood. She told The Atlanta Journal-Constitution:
"We used to vacation there when the kids were young, it's one of our favorite places to be."
While the O'Gormans kept the 2020 "Dream Home," they soon found the property too much to handle.
Luckily for them, houses were selling fast that year, and they were able to sell theirs
in just three weeks. So, while those long past family vacations remained a memory,
the O'Gormans seemed to find solace in the $1.6 million the property earned them.