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Creative Selling: Home Raffles

written by: •edited by: Ronda Bowen•updated: 5/17/2011

A raffle by any other name is gambling. In some states, it is possible to raffle a house in conjunction with a contest or by teaming up with a local non-profit organization. Those who are considering a raffle to get rid of a home should think twice about how this is implemented.

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    Real Estate Markets and Sales Via Raffles

    North Court Oast, The Kilns, Lower Lees Road, Old Wives Lees, Kent If you are one of the thousands of homeowners who may be trying to sell your home and not having any luck, you might be wondering is it legal to sell your house in a raffle? The answer is not simple and will vary depending on the state that you live in and the individual requirements that the state has regarding gambling laws.

    Raffling a home is fraught with concerns both to the buyer and to the seller of the home. In addition to the tax ramifications of selling a home, there are also legal issues that may be a concern if you decide to raffle your home. In order to successfully raffle a home in your state, there may be some things that you will have to do first.

    A) Check the state laws - many states prohibit any type of gambling unless it is done by 501(c)(3) organizations. In order to raffle a home, the homeowner would be required to team up with a charity to run the raffle;

    B) Advertising raffles - if the state allows this type of raffle, there must be advertising done so that people will be aware of the raffle. The advertisement may be required to provide specific details such as cost of tickets, number of tickets to be sold (minimum and maximum may be required) and date the drawing is to be held;

    C) Legal advice - for those who live in states where a raffle may be legal, it may be prudent to contact an attorney for assistance. In some states, you may also need to work with a real estate agent to handle the end sale. Make sure that you fully understand all of the requirements in your state before you get started.

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    Raffle or Skills Based Contest?

    Buying raffle tickets While in some states a raffle may not be legal, it may be possible to put your home into a drawing for a skills based contest. For example, a homeowner may be able to still "raffle" their home by creating a skills based contest that requires an entrance fee. Some examples may be writing an essay, submitting a painting or drawing or other types of skills displays. In these cases, it is also important that you contact local authorities to find out what the requirements may be for this type of contest. There may be limitations on how much may be charged for an entrance fee, how many entries may be accepted and how the judging of those entries is to be handled.

    Warnings to buyers of raffle tickets for homes

    It is important to know that if you buy a raffle ticket for a home, you may be responsible for hefty taxes. Dependign on how your state qualifies your winnings, you may be facing gift taxes, hefty legal fees and real estate taxes. In some instances, it may be necessary to take out a mortgage on the home that you won in a raffle in order to pay the associated fees.

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    Verifying Legalities

    For those who are considering a raffle to get out from under a home they no longer wish to live in, the question is it legal to sell your house in a raffle is the first thing that needs to be addressed. Contact the appropriate authorities in your jurisdiction before getting started and find out what the law is before you put up a raffle sign.

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    1. Kurutz, Steven September 24, 2008 New York Times Raffles: Real Estate's Lat4est Game of Chance
    2. McLinden, Steve Selling a Home in a Raffle
    3. Gambling Law US State Law Summary

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