Bond payoff is not tax deductible. It is not a tax, but really is part of the purchase price of the house. No matter how the Villages sales agents try to spin it or dodge around it, the only thing it is related to a tax is that the annual bond pay down is "collected" along with your annual property tax bill, for an extra fee of course. In most states the cost of the infrastructure for a residential development is included in the "purchase price" and not "bonded out" as a separate item.
To my knowledge the interest paid on the bond is not tax deductible either, but someday someone may challenge that with IRS arguing that the "bond lien" is really a "second mortgage".
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