Everyone loves a happy ending, right? And Extreme Makeover, the popular ABC reality television show, always has a happy ending. The thing is, the troubles of those on the show don’t always end once the cameras shut off.
Consider Larry and Judy Vardon. The couple have a child who is blind and autistic; they are both deaf. The Vardons ran into financial troubles when insurance would not cover the cost of their son’s treatment. The spiraling cost of medical bills had made it impossible to make renovations to their home, including communications and safety features that were necessary in their case.
So in came Extreme Makeover and Ty Pennington to the rescue. The team improved the Vardons’ home, including adding assisted living technology. And as fast as they swooped in, they left.
The Vardons went back to their lives. They had an existing mortgage when the home was renovated by the show in 2004, which they refinanced after Larry Vardon was laid off. Their mortgage rate has subsequently reached 11%.
Adding to their woes? Increased property taxes. The improvements to their home also raised their assessment; their property taxes bumped up by $1,000 after the renovations.
Even worse? Larry Vardon is a welder for Chrysler. With lay offs looming, he’s worried about losing his home.
The show has dealt with similar issues before and claims to be upfront with folks who appear on the show about the potential for increased property taxes, as well as increased utility bills. At least one other “Extreme Makeover” home has fallen into foreclosure on a previous occasion; that home had been pledged against a family business.
Reactions to the news has been mixed. Many viewers are sympathetic towards to the Vardons, especially considering their disabilities. Others feel that the Vardons took on more than they could handle and “blew” their chance.
What folks do seem to agree on is that the show’s producers are making money on a concept that, while charitable in nature, may contribute to the homeowners’ woes. Increased property taxes and cost of living are challenging for even the most settled of homeowners; those in precarious positions to begin with may find it even more difficult to manage.
I’m not sure where I come down on this issue. I’m not a fan of the show (sorry). Income tax issues aside, I don’t know that this is the best way to make a real difference in the world (hey, I’m entitled to my opinion) – not to mention that, after years of watching Ty Pennington on Trading Spaces, I’m a little wary of the idea that he’s knocking down and rebuilding houses…
What do you think? Good TV, consequences be damned? Or exploitative TV at its worst?
I always wished they would do a revist show, coming back to show how a family was doing after a home makeover. If a family can’t afford to fix or live in what they already own, how can the possibly continue to live in a much improved home? I’m one of the funny,out of step folks that live to ones financial capabilities. I wondered if the network helped these folks with the extended costs of an upgraded house, guess not!
Let’s start a show called “Extreme Credit Score Makeover”
The show is absolutely ridiculous! You take some people who are down on their luck and instead of simply repairing their 1500 sf ranch to bring it up to code they do a million dollar remodel and give them a 5000 sf McMansion.
The families are ill-equiped financially to deal with the increased costs (property taxes, insurance, maintenance, utilities, etc.) of maintaining a home of that size. The show is actually doing them a disservice by upgrading their home to one that rivals a luxury resort. Add to that the imputed income from the free remodel (100% taxable) the couples can be saddled with a significant IRS bill!
Dave,
I agree. The show gets around the imputed income bit, however, with a very “creative” argument – check out the link to the TaxProf post on the subject, it’s definitely worth the click!
From the story I am confused as to whether Larry is laid off or not. They refinanced when he was laid off but later in the story he is a welder at Chrysler worrying about being laid off. Not withstanding that however, the only increase in costs outlined in the story because of the makeover was the $1,000 in increased property taxes. Because of their disabilities perhaps $1,000 in increased costs is a good deal. I am not sure how the refinancing is connected to the makeover.
In any event folks, TV isn’t out there for the public good. It is out there to make money for the folks who run and work at the networks. Their job is to put on programs that they can profit from – and apparently that is what they have done with this show. If I were a stockholder I would be happy with them. Charity is the job of other folks – not entertainment outlets. Don’t know if the show is any good or not having never seen it.
Skip McQuaid
This is the very question I emailed to the show. And which I never received an answer. County and State taxes are hardly ever freebees. I know that when I have remodled my home (about 10,000) my real estate taxes wemt up and also insurance rates too. It pays to know the bottoom line before you accept a gift.Helping people could be a good thing, if you do not throw them under the bus while doing it.
The show was filmed in 2004. Sometime between then and now, Larry was apparently laid off and the Vardons re-fi’ed. They re-fi’ed after the makeover so that they borrowed against the improved value of the house; the total cost of the mortgage was higher, plus the interest rate appears to be variable (that’s the only reason I can figure for an 11% mortgage).
According to several news reports, Larry is working again but he works for Chrysler (the family lives in Michigan) so job security is iffy right now. Judy does not work.
I have a couple of quetions for others to comment.
1. Would not the reqork be classifed and a non-taxable gift with no imputed income?
2. Is there a way to put some sort of comditions on the gift. For example, some sort of hold on unsing the house as loan financing for a perod of time.
homeownership is earned not handed out on a silver platter
your home is not a bag of potatoes
I so agree with this. Why can’t they just give this people a decent and clean and comfortable home. Why do they always have to be like mansions???? There is a home in my area that was “rebuilt”, it was very nice, pool,etc,etc. It is now in foreclosure and has been vacant for at least a year that I know of. Everything is dead, and believe me, it was a beautiful… If these people did not keep their homes clean and maintained before, what the “HH” makes you think they are going to do it now??? Just my personal thoughts
Kelly, could you post a link to the Tax Prof article you mentioned?
Oxnate, it’s in the post. Click on the bold text “income tax issues.”
First of all, I would NEVER let the clowns that produced “Trading Spaces” touch MY house. God knows, we need a new roof, a new AC compressor, major plumbing fixes, but I wouldn’t let those idiots do it. They did a show in Austin years back when Trading Spaces was new and buzzing, and the husband of one of the couples was interviewed after the show by some local news team and was clearly working hard to not bust up crying at what they did to his home. A reasonable homeowner would sue a general contractor over the mess they left him with. Their friends were nearly hysterical as well, they had had no desire to mess up this guy’s dining room but were pressured into doing more than they had time for and were qualified to do.
TV is not a charity, they make money off these shows which, labor and materials aside, are very cheap to produce compared with a standard drama or sitcom where you have to pay actors and a huge support crew. Most large cities have actual charities that will do home repairs at a seriously reduced rate if not for free. I live in that part of town, and lots of my neighbors, elderly, unemployed, handicapped, etc benefit from a city sponsored program of that sort. I’m a huge fan of legitimate charities and contribute as much as I can in both time and money. Food and shelter are a basic human necessity and I’m happy to help fellow beings to survive, but my charity falls well short of subsidizing luxury homes they won on some TV show.
I’ll admit, I watched the show when it first aired – but quickly started questioning the opulence and added expense to the homeowners.
If the show could set up the families and other with the tools they need to build better lives for themselves, that would be extreme.
The road to hell is paved with good intentions.
I just watched the show with Rodrigas the Vet who lost a leg in Iraq – they gave him a huge house – with a 600 Gallon Fish tank – what the heck is he going to do with that a few years from now? Even though they said that a service will come and service the tank – are they coming indefinitely? I daub that and after that? It will cost a ton to remove that thing later. What was that show thinking and what where the people thinking or did they not know what was going to be done to their house. The Girls bedrooms where all in children themes – great did they think that a 9 year old is going to stay forever into Dr. Sous? i am totally puzzled.
Never look at gift house in your mouth…
The tv show should be made to sign a contract that they are responsible for a.) paying off old mortgage, b.) paying any increases in property taxes and utilities, or living expenses to the family as a result of the episode while they still reside in the home.
I shouldn’t think that the family would be responsible for the windfall improvement value made to home, as that was gifted.
I do feel sorry for the Vardon’s but wouldn’t they have been told before hand that this could happen? Of course it does depend on what does get done to the house. Let’s hope that the TV producers are more careful in the future.