It’s one of the most persistent rumors in the sweepstakes community. You’ve likely seen it in a chat room or a blog comment: "If you win the HGTV Smart Home, just have the sponsor sell it to you for $1. That way, there’s no big prize value, and you don’t owe any income tax!"
It sounds like a genius loophole. Unfortunately, it is a complete myth—and following it could lead to a devastating audit from the IRS.
The IRS "Fair Market Value" Rule
The IRS is not easily fooled by a "bargain sale." According to tax law, when you win a prize, you are taxed on its Fair Market Value (FMV)—the price a willing buyer would pay a willing seller on the open market.
If HGTV "sold" you a $1.2 million Orlando home for $1, the IRS wouldn't see a $1 transaction. They would see a $1,199,999 gift of income.
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The Reality: You would still be on the hook for the full tax amount.
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The "Double Hit": Even worse, by "buying" the home for $1, you are using your own after-tax dollars to reduce a prize that you were supposed to get for free. You end up in a worse financial position than if you had simply accepted the prize normally.
The "Bargain Sale" Myth: Why You Can’t Just "Buy" the Smart Home for $1
Why "Gifting" Doesn't Work Either
Some people think they can avoid the tax by having the home "gifted" to them. However, in the eyes of the law, a sweepstakes win is earned income, not a gift. HGTV is a business, and they are required to report the value of the prize to the IRS on a Form 1099. Once that form is filed, the IRS expects their 37%—no matter what you called the transaction.
The Only Legitimate "Loophole": Keep The Sweep
The reason people look for "loopholes" like the $1 sale is that they are desperate to avoid the massive tax bill. But you don't need a myth when you have a mechanical solution.
Keep The Sweep is the only platform that allows you to keep the full value of your prize without triggering the "tax-on-tax" cycle.
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Direct Settlement: We pay your federal and state income taxes directly to the IRS.
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No Value Inflation: Because our community-funded platform is an independent service (not affiliated with the sponsor), our payment doesn't increase the "Approximate Retail Value" of your prize.
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The "Supply Box" Advantage: Just like the factory workers who helped one another in my past, our members' small $25 annual investments create a fund that handles the $400,000+ tax bills that usually force winners to sell.
Win the Home, Not a Legal Headache
Don't bank your future on tax myths. The HGTV Smart Home 2026 is too beautiful to lose over a misunderstanding of IRS rules.
Secure a legitimate strategy. Join Keep The Sweep, register your entry before the April 21st deadline, and know that when the IRS comes knocking, we’ve already opened the door for you.
FAQ for this Post:
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Q: Is a $1 sale ever legal for property? A: You can sell a house for $1, but if the market value is $1 million, the IRS treats the difference as a "gift" or "income," and taxes will be applied to that difference accordingly.
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Q: Does Keep The Sweep increase my taxable income? A: Because we pay the IRS directly on your behalf for a claim registered on your account, we help settle your liability without the sponsor having to "gross up" the prize value.
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Q: Can I donate my win to charity to avoid the tax? A: While you can get a deduction, IRS limits usually only allow you to deduct a portion of the value each year, meaning you would still owe taxes on the majority of the win—and you wouldn't have the house anymore!
