The property taxes always worried me.
Whenever I saw television commercials touting the drool-worthy parade of mansion-sized homes and luxury cottages, I'd think about a) how cool it would be to live in a house that I didn't have to make mortgage payments on; and then b) crud, those are all pricey areas — I'd need a second job to cover the property taxes!
And according to an article about lottery dream homes in this week's Globe and Mail, my worries were right on target. The article quotes Jean McKay, a recent Princess Margaret Welcome Home Sweepstakes winner who opted to sell her 6,500-square-foot prize home instead of moving in. “You wouldn’t have a mortgage but you’d have all the other expenses,” she said. Indeed, the property tax was estimated at $27,000 a year — about nine times what Matt and I pay on our not-huge but comfortable home on a small lot in Toronto.
Selling and banking the profits is the choice most show-home winners make, admitted a spokesperson for the sweepstakes. And, don't get me wrong, that's not a bad place to be in. McKay spent $100 on her lottery ticket — and now that she has sold her prize (which was pegged by lottery organizers at $3 million), she and her husband have paid off the mortgage on their longtime family home, and are quite happy.
Still, the Globe article warns that would-be winners need to take the advertised prize values with a grain of salt: "If this year’s winner does sell, perhaps the most important thing to consider is that winning the house valued at $4.3 million will likely not mean pocketing a cheque for anything near that amount. Over the past four years, houses have sold for much less — sometimes close to half — their estimated value."
And those are issues facing the lucky few who win. It's estimated that Canadians spend more than $8 billion (yes, with a "b") on lottery tickets each year. According to Statistics Canada, households in this country spend an average of $265 a year on government-run lotteries (such as Ontario's Lotto Max) alone. Yet the odds of recouping that money, let alone winning big, are slim.
Most disturbing of all are the stories of people who go spending-crazy with the proceeds of a big lottery win (or, like this couple near Ottawa interviewed by the CBC in February, even before they collect their winnings), only to end up even worse off financially than they were before.
If I have spare cash, I'll put it in the bank, thanks.
What's your take on lotteries: Harmless entertainment that's occasionally worth spending a few dollars on, or a dangerous waste of money?