Regarding your assertion that you would not be able to recover the bond payoff when selling the house, what data do you base this statement on? Regarding interest, the bond is amortized as a 30 year mortgage which means most of the interest is paid in the early years. After 10 years, you will have paid about 50% of the total interest. You do not have to stay in the house 30 years to save substantially on the non-deductible interest of the bond. Regarding trying to conflate property taxes with the bond, your total bond payments will be more than 2x the original bond principle. If I could prepay my property taxes for the future at 50% today, I would certainly consider it. Before paying off the bond, it is worthwhile to consider how the funds that would be used to pay off the bond are currently invested and the after tax return versus the saved non-deductible interest.
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Originally Posted by joseppe
I think of the 'bond' as part of the Taxation of the property. It is in fact listed and paid with your property tax. I would never consider the bond as part of the cost of the property any more than I would consider the Tax part of the cost or 'basis' of the property. Paying the bond in full is akin to pre-paying your property tax for the next 30 years. Who would do that? Bonds have become a popular way for developments to create better infrastructure. The villages is not the only place you will find Bonds being used for this. We recently moved here from California where we had something called 'Mello Roos' that applied to many, many development areas in Southern California. Same concept as Bonds here in Florida. Personally I would never pay off a bond any more than I would pre-pay Property tax. Should you choose to sell the property its not likely you would recoup the money you put into paying the bond. If you were going to live in the home for the 30 years of the bond's lifetime then it could make sense to pay the bond to save the interest you would pay but few here would make that stretch of time.
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