Tax Consequences of Extreme Makeover: Home Edition, Idaho Chapter

Yet more on the tax consequences of ABC's TV show, Extreme Makeover:  Home Edition -- this time, a press report on an Idaho resident:  Stockdales Get "Makeover" House Tax-Free, But Their Property Tax Will Likely Rise:

Some call it a questionable loophole. Others just call it a good idea. The producers of ABC's "Extreme Makeover: Home Edition" use a section of the Internal Revenue Code to keep families they help, like that of Ryan and Karia Stockdale of Middleton, from getting hit with a big tax bill when construction crews pack up and the dust settles. ...

According to IRS code, if a taxpayer rents a home to someone else for less than 15 days, the rental payments he or she receives don't count as income. So producers of the show can rent properties for up to 14 days while a host of volunteers tear down and rebuild The "rent" the show pays is actually the furniture, appliances and other niceties used in the rebuild. While most tenants don't rebuild rental properties from the ground up and equip them with state-of-the-art heating, cooling and sprinkler systems, those improvements and others are tax-free for the owner if their tenant happens to do so. ...

It's all legal but has apparently raised enough eyebrows across the country that Newsweek ran an article on the practice in 2004, calling it questionable. Brian Hirsch wrote a defense of the show's strategy in the University of Cincinnati Law Review in 2005, adding that the IRS would face public relations problems should it start cracking down on families helped by television shows like "Extreme Makeover." Still, recipients of free home makeovers will face increases in local property taxes.

(Hat Tip: Gregg Benson.) Prior TaxProf Blog coverage:

• Property Tax Consequences of Extreme Makeover, Home Edition (1/23/07)
• Tax Consequences of Extreme Makeover, Home Edition (12/17/06)
• IRS on Tax Consequences of Extreme Makeover: Home Edition Reality TV Show (4/23/06)
• More Scholarship on Tax Consequences of Extreme Makeover: Home Edition (12/4/05)
• Student Note on Extreme Makeover (10/13/05)
• More on Extreme Makeover: Taxpayer Edition (2/2/05)
• Extreme Makeover: Taxpayer Edition (7/5/04)
• Yet More on Extreme Makeover = Extreme Taxes (5/14/04)
• More on Extreme Makeover = Extreme Taxes (5/12/04)
• Extreme Makeover = Extreme Taxes? Tax Consequences of Home-Makeover TV Shows (5/10/04)