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Originally Posted by BrianL99
Thank you. I love being right.
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We all know that, its obvious. . .
Quote:
Originally Posted by BrianL99
Now please go over to the thread on CDD Bonds. You're a former finance guy. Please explain to the masses, that CDD Bonds are nothing more than mortgages, with a different name and they only relate to land and not homes.
(Once you explain that, then you can move on to how Bond prices fall, when Interest rates rise.)  |
CDD bonds are not quite mortgages, but from a payer's point of view,
the bond looks like or behaves like a mortgage with amortization identical to a mortgage, the payment concept is the same as a mortgage, and a lien against the property with the ability to foreclose against the property, like a mortgage.
A mortgage is a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property. The bond holders do not hold title to the property, and do not lend you the money.
Its really a property improvement assessment fee, funded by a bond, creating a lien on the land. Same as an HOA special assessment fee for an HOA project to improve the entire HOA community after borrowing money. The HOA special assessment in an HOA would be passed to the next owner, but its generally not part of the HOA fee, which is a permanent lease payment on the land.
Special Assessment Tax: A Definition | Rocket Mortgage
In my intuition, TV bonds are not tax deductible because the bond was created by a private entity and not a governmental entity. Would that amount based on the technicality be flagged by the IRS? very, very doubtful in my opinion. Besides, the IRS tends to go after not reporting all your income properly, and less about the expenses, especially with the current personal exemption.
From a finance operational point of view, the bond holders, who lent the money to the villages, expect an interest payment at regular intervals. When a home owner pays off the bond prematurely, the monies go into a fund to keep the principal and generate interest to replace the expected annual payment and fund the future interest rate payments and the bond repayment at the end of the life of the bond. When current interest rates are way below the bond interest rate, the prepayment can cause future payment shortfalls, whereas when current interest rates are above the bond rate, the prepayment holding fund can generate excess interest. . .
This explanation is the way I, as a finance guy and fill out three or four tax returns each year, think about the role and relationship of the TV bond. It may not work for other people. . . or anyone else.
good luck.