Raffling your home to raise funds: A notion too good to be true?

A house in the sunny southeast; concert tickets; a freshwater pearl jewellery set; a Nissan X-trail vehicle – these are just some of the prizes currently on offer in raffles around the State.

You’ll probably have seen the ads on social media, newspapers – even banners in towns around the country. Raffling off homes and other assets – either as a means of “selling” them, or to raise funds for charitable causes – has become increasingly popular.

But is the chance to win a new home for just €20 or a new watch or car – or the chance to make more by raffling your home than selling on the open market – too good to be true? And what are the tax implications?

Why raffle

Think about it. If you have a three-bed house in Cavan for example, you might make €200,000 by selling it in the normal fashion. If you sold lottery tickets at €50 each however, and managed to sell 10,000 of them, you would be looking at a gain of some €500,000.

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Earlier this year, a family raffled a fully furnished barn in Co Kilkenny, through a UK website, and managed to sell some 130,000 tickets at £5 each. This brought in £650,000 (€760,892), with 5 per cent (£32,500) of the proceeds going to their chosen charity. More than could have been achieved through hiring an estate agent? Quite possibly.

Raffling has also become a tool to raise money for charities and sports clubs, with a school in Killarney, Boherbue Primary School, running a raffle on a house in Killarney and, in Westport, Co Mayo, the local GAA club also running such a draw.

Earlier this year, Clare GAA opted for this approach when it was looking at fundraising ideas. "A few other counties were ahead of us with the idea," says Kieran Keating, vice-chairman of Clare GAA, noting that the county was looking for a fundraising idea with a bit of a "wow factor".

A deal was struck with a local builder, a "good GAA man", to acquire a four-bed newly built home in the popular seaside resort of Lahinch. The deal was struck on favourable terms – "at last year's prices" says Keating – which gave the county a bit of a head start on its fundraising needs.

Running a raffle can cost. Listing on a site like Raffall.com, for example, involves fees and charges

“We’re hoping to sell well over 10,000 tickets, and we hope to raise €1 million or so for Clare GAA,” he says, noting that there will be a limit of 25,000 tickets, which sell for €100 each.

The draw has the added incentive that €25 out of every €100 raised stays with the local club where the ticket was bought. That means all the clubs in the county will be “putting their shoulder to the wheel” to get sales in, says Keating.

It's not just properties that are being raffled. On Raffall. com">Raffall.com, Irish hosts have raffled a Rado Diostar watch (£1 per ticket) and an iPhone 13 Pro Max (£4 a ticket).

The costs

Running a raffle can cost. Listing on a site like Raffall.com, for example, involves fees and charges. The site says it takes 10 per cent of the total ticket revenue, as well as a “featured fee”, which must be paid up-front. This is nonrefundable, and comes to 2 per cent of the competition value for a prize draw lasting a month, for example.

It is for reasons such as this that Clare GAA opted to apply for a licence to hold the draw itself to try and minimise the cost. It received a licence from Ennis District Court in June.

“Every euro we raise is for Clare GAA,” says Keating, though he notes that there were legal costs associated with getting a licence.

For the prize winner, there may also be costs. In the event that they win a property, there will be conveyancing costs – typically of between €1,000 and €2,000 – to take ownership of the property, and potentially stamp duty (see also below).

What if you don’t sell enough tickets?

The obvious concern when choosing a raffle as the route to offload an asset is that you may end up “selling” it for considerably less than it may otherwise have been worth.

For example, if your property has a value of €300,000, but you only sell raffle tickets worth €200,000, you could be looking at a significant shortfall if the raffle was to go ahead.

There are ways you can protect against this. For example, when you list items on Raffall.com, there is a safeguard in the event that the target number of ticket sales isn’t reached.

So, rather than have a house raffled when just €200,000 of a €400,000 target has been attained, the winner of the raffle instead gets 75 per cent of the ticket revenue – ie €150,000 in this example. If there is a chosen charity, it also gets 5 per cent, while Raffall gets to keep the remaining 20 per cent. The people raffling the asset will walk away with no cash and no benefit – but they do retain their original asset.

This is what happened to the owner of a docklands penthouse apartment earlier this year, when he sought to sell at least 20,000 tickets at £50 (€58) each. This would have generated £1 million (€1.2 million) before costs, based on ticket sales of 20,000.

However, it was not to be: only about 5,600 tickets sold and, in the end, a cash prize of €251,000 was awarded to the winner, with the owner retaining the apartment.

On his Instagram page, winapenthousedublin, the owner said he got "zero" from the raffle. "There is no financial gain for me (plenty of loss though)," he wrote, noting that his marketing and PR costs would not be refunded.

For the seller then, opting to sell an asset via raffle may simply end up generating money for the hosting company – and the eventual cash prize winner – but not for yourself.

If you win a house or an apartment in such a prize draw, you will have to pay stamp duty on the transfer of the property

And for someone buying tickets through a raffle, it’s also important to be aware that the end prize – for example a house or car – may never materialise. That is not always the case however; Clare GAA’s Keating says the house in Lahinch will be raffled on the May bank holiday in 2022 regardless of ticket sales .

“Whatever happens, the house will go,” he says.

What about tax?

As if winning a prize isn’t good enough, finding out that you won’t pay any tax on that prize is almost like winning again.

According to Revenue, winnings from betting, lotteries, or games with prizes, aren’t liable to capital acquisitions tax (CAT) or capital gains tax (CGT), at a rate of some 33 per cent.

This will also be put on a firmer footing in the Finance Bill, which is currently going through the Dáil. It is seeking to clarify the treatment of non-cash prizes from such raffles and draws, to ensure that neither CAT nor CGT arises on non-cash prizes won in raffles and draws, "provided such raffles and draws are conducted in a bona fide manner".

However, a spokeswoman for Revenue notes that where the prize won is a property, stamp duty will generally apply. This means that if you win a house or an apartment in such a prize draw, you will have to pay stamp duty on the transfer of the property. This is charged at the rate of 1 per cent of the market value of the property up to €1 million and 2 per cent on any balance over €1 million. So, a €350,000 “prize” will result in a tax bill of €3,500.

Some charities raffling properties may offer to cover such costs but others won't. For example, in the case of a property in Enfield, Co Meath, which is being raffled by the Killeigh Community Centre Development Association, the terms and conditions of the draw state that "the winner will be responsible for any and all legal costs and associated outlay in relation to the transfer of the property into the winner's name, including the winner's legal fees, stamp duty costs, registration expenses and insurance".

And if the winner wants to then sell the property on, a tax charge will apply.

According to Mark Corcoran of tax advisers Taxback. com, the base cost for CGT would be the valuation of the property when they won the house – not the amount it raised in the raffle.

And for people looking to sell their home and hoping to raise more money from a raffle than they would in the open market, the Department of Finance has its eye on just such an event in the aforementioned Finance Bill.

The sale of your family home – or principal private residence – is generally tax free, regardless of how much it sells for and how much of a gain that is on the price you originally paid for it. However, Revenue has clarified that where a principal primary residence is disposed of through a raffle or draw, the CGT relief is limited to gains up to the market value of the property. This means that any gain over the market value of the property will be subject to CGT.

“People will be subject to CGT at 33 per cent on any gain made over the market value of the PPR property,” says Corcoran. So, making an extra €150,000 over market value from a raffle would result in a tax bill of almost €50,000.