Friday, Dec. 10, 2004 | 9:24 a.m.
The family also is getting free utilities, free housekeeping and the payment of all of the applicable taxes for the rest of their lives -- as long as they own the home -- says KB Home, which built the 3,200-square-foot, two-story house.
The show's producer and the builder say that while they do not want to see the Broadbents forced to put the new five-bedroom home up for sale just to pay the taxes -- that, they say, would be a public relations nightmare -- they are just as motivated, or more so, by their desire to help the struggling family.
The show routinely tugs at the public's heartstrings by rebuilding -- in seven days -- the homes of destitute people. But it arguably could not have selected a better family than the Broadbents.
Patricia Broadbent, a longtime community activist and single mom who has brought AIDS awareness to the forefront, currently is undergoing chemotherapy for lung cancer. Her three adopted daughters who share her home -- Hydeia, 20, Shania, 16, and Patricia, 12 -- were born infected with the HIV virus that causes AIDS.
"At the end of the shooting (of the episode), our chairman, Bruce Karatz, said we had to do more for this family -- the home just was not enough," said former Las Vegan Derrick Hall, spokesman for KB Home in Los Angeles.
"He did not want the home to be a burden for Pat, whether it was caring for the size of it or for any financial attachment, including taxes."
As a result, KB Home tore up the mortgage and will pay the property taxes that will skyrocket when the value of the property in the 3100 block of Webster Circle is reassessed, said Hall, who worked for the Las Vegas Sun in the 1980s.
According to the Clark County assessor's records, Broadbent's 41-year-old, one-story, three-bedroom, 1,300-square-foot, cinder-block home that was demolished had an appraised value, including the land, of $62,860.
By contrast, the pool that was built in the backyard by Renaissance Pools for the "Extreme Makeover" episode is valued at $40,000, the pool company said.
KB Home also landscaped about a dozen homes surrounding the Broadbent residence as a gift to neighbors who had to put up with round-the-clock construction during filming of the show in early November. The home builder will also take care of maintenance on the Broadbents' pool and yard and provide a once-a-week housekeeper for as long as the family owns the home.
The builder and the show's producer say they are relieving the family of state and federal tax burdens simply by utilizing existing tax codes -- some of which the general public may know little about.
"I'm constantly surprised by the numbers of people who are concerned about the tax issues when we build these homes," said Tom Forman, executive producer of "Extreme Makeover: Home Edition."
"There is no (federal) gift tax involved because we rent the houses from the families during the time we are there. The (U.S.) Tax Code says that homeowners are not responsible for improvements made to their property by renters."
Forman said Hollywood producers have long utilized that law especially when doing location shots where they erect walls and even entire buildings.
Las Vegas tax expert Bonnie Houldsworth, senior partner in the accounting firm of Houldsworth, Russo & Co., agrees with that interpretation of the tax law.
"It should work because the expenses of improving the rented house were done to produce revenue for the network show," said Houldsworth, whose company has operated locally for nine years.
Houldsworth said the practice of renters making property improvements also is common in commercial real estate -- something she has done for years for her own business.
"I'm renting for the longterm, and I have made a lot of improvements," Houldsworth said, noting the property owner is not taxed for any of them.
Producer Forman said reassessment of local property taxes, however, is a much different issue -- one "the families generally must wrestle with."
"We talk about that issue with families before they are even selected for the show," he said.
"In this case KB Home went above and beyond by offering to pay the property taxes. But in other cases we encourage families to look at their financial situation and realize they will be paying a greater assessed value."
To that end, Forman said, the show provides chosen families with a tax adviser to address reassessment issues. He said no family has turned down the reconstruction of their homes because of potential property tax increases.
KB Home, which builds 4,000 homes a year in Las Vegas -- more than any other builder -- also is addressing Broadbent's potential income tax liabilities stemming from its gifts of free utilities and other services.
"We're paying all of those taxes too," Hall said.
Actually, Houldsworth said, KB Home, in effect, will be paying taxes on taxes because of the mathematical equation related to the repeated gift giving.
She said if the services have a $10,000 value and if Broadbent, who lives on disability, is in the 15 percent tax bracket, the income tax on the services that she would have to pay the Internal Revenue Service would be $1,500.
But if KB Home pays those taxes and subsequent taxes on the gift of the tax payments, the total would be $264 more -- that is, $225 in taxes on the $1,500 payment made by KB Home, $34 in taxes on the $225 payment made by KB Home and $5 in taxes on the $34 payment made by KB Home.
Therefore if KB Home pays $1,764 for the original taxes and taxes on the tax payment gifts Broadbent would owe nothing to the IRS.
Attempts to interview Patricia Broadbent for comment on her tax situation were not successful.
"We are extremely excited about this show," KB Home spokesman Hall said. "Not only is it a chance for us to display a house that is absolutely gorgeous, but also to help a deserving family and encourage AIDS awareness."
The Broadbent home was rebuilt with health issues in mind. A state-of-the-art air-purification system was installed and very little carpeting was put down to avoid the trapping of harmful dust in the home, show officials said.
Forman said not only will those features be unveiled on Sunday night's show, but also the installation of some of the technological amenities are expected to be featured early next year on an episode of "Extreme Makeover: Home Edition -- How'd They Do That?" an hour-long, behind-the-scenes show.
"Beyond the public relations aspect, we care about these families," Forman said. "Our goal is to make their lives better than before.
"There is no shortage of people in need. We get thousands of applications and we have to say no to almost all of them."
The show repaired, refurbished or rebuilt 13 homes during its first season last year and was nominated for an Emmy for best reality show. This season, 23 homes will be redone. So far this season (Sept. 20 to Dec. 5) Extreme Makeover: Home Edition is the 17th most watched show according to Nielsen Media Research.
"It's a huge success -- beyond our dreams," said Forman. "It's a pretty simple formula, and the secret of its success is that people like a happy ending. Who gets tired of that?"
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