Arizona Air Force Veteran Raffles Off House to Pay Off Debt

For $100 and with a whole lot of luck, Heather Gray's four-bedroom home in Gilbert, Ariz., can be yours.

Gray lost her job in the economic meltdown and is now on the verge of losing her 2,200-square-foot home outside Mesa, too. But rather than have her credit destroyed and become another foreclosure statistic, the 33-year-old Air Force veteran, who served four years of active duty, has found a way out of her predicament.

She's donating her home to a charitable foundation, which will pay off her mortgage and raffle off her home — at $100 a pop.

For Gray, it's a chance to walk away with no financial obligations, and start all over again.

"While certainly, I want to get myself out of the situation that I'm in, I'm not looking to walk away with anything," says Gray, who bought the house in November 2007 but could no longer afford to live in it after she broke up with her fiance and was laid off as the public information coordinator for the city of Mesa.

"I just want to be at zero and get a chance to start over."

Click here to see video of Gray.

Gray called the Murray Grey Foundation, a non-profit organization based in Phoenix that provides assistance to military families facing foreclosure, and she proposed a novel idea: She would donate her home to the foundation, and it would raffle off the house at $100 a ticket.

"We made the plan to raise $500,000," Gray says. "I need $350,000 to pay off my debts in the home that I owe, and the charity will receive at least $150,000, and anything we receive over $150,000 will go directly to Murray Grey, 100 percent," she told

People can join the raffle by making a $100 tax-deductible donation at the Murray Grey Foundation's Web site. Everyone who enters the raffle receives a $500 gas or grocery voucher that can be used anywhere in the country. The drawing will be held on April 11.

The lucky winner will wind up shelling out much more than $100, because the Internal Revenue Service considers raffle prizes to be taxable income. In the case of a non-cash prize, such as Gray's home, the winner must pay 25 percent of the fair market value of the prize, minus the price of the raffle ticket. Since the fair market value of Gray's house is $280,000, the winner will owe the taxman $69,900.00.

"You can try to lower it based on the comps in the area," says Mario Piccolino, a Certified Public Accountant and owner of A&A Income tax, referring to the comparable home values. "But it's pretty much the fair market value."

Then the winner must pay a tax on the property to Arizona at 5.04% — another $14,112.00. Factor in $1,200 in annual property taxes and all the other expenses a homeowner incurs – insurance, utilities, upkeep and repairs — and that $100 ticket has become more than $84,000. That's not chump change, but it's still a dirt-cheap price for a four-bedroom, 2 1/2-bath home in sunny Arizona.

The Murray Grey Foundation has no financial responsibility to the IRS or the state of Arizona once the house has been raffled off, and neither will Gray, as the $350,000 she will receive from the ticket sales will cover everything she owes.

Murray Grey hopes that its partnership with Gray will not only give someone a home, but that it will also elevate the profile of the problems military servicemen and women are facing in this economy.The foundation reports that it has heard many stories like Heather's, particularly regarding active duty servicemen and women.

"Our job is to really help, do what we can do, whatever we can do, providing short-term aid, and help try to prevent people from being evicted from their house," said David Walsh, Murray Grey's president of marketing. "We just owe it to these people to help."

National Guardsmen and National Reservists are in particular need, he said. When a Guard or Reservist gets activated, his employer is required only to keep his position open until his return — not to pay his salary while he is on active duty. As a result, most Guards and Reserve soldiers end up supporting families on their military income alone, which is usually less than half of what they earned in their civilian jobs.

"On average, they're making 50 percent or 60 percent of what they were making when they were deployed, and they leave the wife to deal with the issues, and they're on the edge because their bills remain the same," said Walsh. "So we get calls — I mean, we get calls for food, calls in the middle of winter when people's, you know, utilities were shut off."

According to RealtyTrac, a data research firm in California, that tracks foreclosure statistics, military families have filed for foreclosure at a much higher rate than civilian families since the start of the economic downturn. Their research shows that in the first four months of 2008, foreclosure filings for military families were up 217 percent; the national average was 59 percent.

"The best solution here is for Heather not to be left in pain, like a lot of other military families are, like there is no help," says Mark Liddel, executive director and founder of Murray Grey.

Gray hopes her story will inspire Americans to help other military veterans and active duty servicemen and women who are in danger of losing their homes. Though she says her plans for the future are unclear, she is committed to continuing the donation/raffle program with Murray Grey.

"I would love to partner with them in the future and definitely help out other deserving families who might be in similar situations. So I see this program, with our economy the way it is, I see this program grow, and growing in an amazing way."