Bond Payment is really 7.5%

[UH1B913]

Most of us received a letter in May stating that how much is outstanding of the Bond Payment on our property. It's a 30 yr payment at 6.93%. When we pay our annual assessment there is also an additional "administrative fee" of $45 for the county to pay The Developer. Our home for example had an original bond of about $7000. When you do the math on these payments - one is paying about 7.5% to TD. The letter addressed the statement "Can I deduct the bond assessment on my property tax bill from my income txes at year-end?" The answer was "contact you accountant or financial advisor.....". The Villages with all their knowledge of what's legal for them to do "according to Federal law" knows full well that these are not deductible. It was addressed in the IRS audit again this past year. Now if one has an equity loan available on their home, one can take out the amount to pay off the bond and LEGALLY deduct that from income taxes. I guess from the legal standpoint AND not paying TD 7.5% per year and not being able to negotiate it down - the decision is easy to make.

[Bryan]

If your math is correct (and I am too lazy to double check it) then I wish I could get 7.5% for my money in savings or CDs today.

You didn't say which decision was easy to make but I presume it is the decision to pay off your bond now/early/as soon as you can afford to. I agree.

As far as tax deductions go, TV is probably erring on the side of over-caution by not saying yes or no to the income tax deduction question. That is a complicated area. More useful and informative would be an answer like "In general, they are NOT deductible. There are a few exceptions so see your accountant if you think you qualify for some special situation." Now that is truthful AND helpful advice.

[Rag Bagger]

Is that it doesn't carry good value for a potential buyer if you sell before the end of the 30 year bond. Most buyers never look at the Bond and will only look at the listed selling price. Not all but most.

If you try to sell your house in say 4 years and add the paid bond cost back into the selling price, you may never get that number. It automatically kicks your house up 15 to 20K on the look up tables and may eliminate a potential buyer. Buyers say they look at the bottom line but totally forget about the bond. Again not all but most.

This is a big problem in my view and one of the things that really sets me off about the sales methods for TV. I know the house really costs $20,000 more than the listed price but it is really suprising so many buyers just gloss over the Bond issue. The realators always say, oh you just pass it on to the next buyer. They are right. So the question becomes will you sell and move in the next few years. If you don't you pay an expensive bond at high interest rates for 30 years. If you do sell and have paid off your bond, you may never recoup the bond cost.

Classic between a rock and a hard spot.

[BobKat1]

You raise a very good point. As a wannabe, when I look at new or pre-owned homes I rarely, if ever, think to add what the remaining bond might be on a pre-owned or $20k or so to the cost of a new one.

[mulligan]

All that being said, I have to admit a shrewd move on the part of the developer on 2 fronts.It leaves them sitting pretty regarding price points, new vs. resale, and he builds infrastructure up front with no out of pocket expense.

[aljetmet]

Most of us received a letter in May stating that how much is outstanding of the Bond Payment on our property. It's a 30 yr payment at 6.93%. When we pay our annual assessment there is also an additional "administrative fee" of $45 for the county to pay The Developer. Our home for example had an original bond of about $7000. When you do the math on these payments - one is paying about 7.5% to TD. The letter addressed the statement "Can I deduct the bond assessment on my property tax bill from my income txes at year-end?" The answer was "contact you accountant or financial advisor.....". The Villages with all their knowledge of what's legal for them to do "according to Federal law" knows full well that these are not deductible. It was addressed in the IRS audit again this past year. Now if one has an equity loan available on their home, one can take out the amount to pay off the bond and LEGALLY deduct that from income taxes. I guess from the legal standpoint AND not paying TD 7.5% per year and not being able to negotiate it down - the decision is easy to make.
I assume you mean that the interest you pay on your home equity loan is tax deductable. Not the actual cost of the bond.
As I am not an owner yet, I would take into consideration if a re-sale has bond left or not. If I do buy a new house I would probably pay off the bond. I would make sure that instructions are left to recoup some of the bond cost if we sold before 30 years...

[JimJoe]

Let's ask:
Why is the bond not part of the listed price? Why dont all property listings SHOW the bond pay off? It is a lien on the property. I think the realtors should be required to tell you right up front. I think they should be required to list it next to the price since it is passed on with the land.

Why is there a "special assessment" every year on your property taxes? Why can it change every year if it is special? Isn't it just another tax? In most locations, special means once.. but in TV it is there year after year. Why? For how long?

Why can the developer per the deed restrictions change them any time without permission of the land owners? Can the land owner change his without permission of the developer.. no way. Is that fair? What restriction is next?

Why are school assessments so high when there are no schools (other than the charter near Belvedere) in TV?

[zcaveman]

I can't say anything about the bond. When I moved here, the bond was in the $6000 range which did not seem like a big deal. Now that is way up there, maybe a change is in order. But not adding it in is "business as usual".

What "Special assessment" are you talking about. I looked at my taxes and don't see one - for any year since I moved here.

I am not aware of the developer changing the deed restrictions. Can you cite some changes that were made to your deed restrictions? I know that they can change them for the different village that they cover when the deed restrictions are cast for that village.

The schools are by the school district. I am in Marion and I think we go up to Belleview. Some of the school taxes are a State requirement. If you think these school taxes are high you should live in NJ. These taxes are nothing. Anyway, we as a community should support the schools as they will educate our future leaders.

[Rob Stevens]

JJ, if you don't mind me asking how much was your special assessment last year and what county are you in? As for the school tax, remember that TV is on the edge of the county - no matter which you live in - and you are paying for all of the schools.

[zcaveman]

JJ, if you don't mind me asking how much was your special assessment last year and what county are you in? As for the school tax, remember that TV is on the edge of the county - no matter which you live in - and you are paying for all of the schools.

Where is the "special assessment" located on the tax bill?

Thanks
Z

[mak44070]

Where is the "special assessment" located on the tax bill?

Thanks
Z
I think it's in the section Non-Ad Valorem Assessments (Sumter County). That section has the bond, fire dept, and maintenance dollars per year.

mary ann

[JimJoe]

The special assessment is:
Non-Ad Valorem Assessments
Code Levying Authority Amount
0000000 UNIT 00000 SPECIAL ASMTS - MAINT $
which is assessed yearly by each district and can vary from district to district and from year to year.

In the deed restrictions it says that the developer can change them.
General provisions: section 4:
Declarant (developer) can amend the the covenants and restrictions by duly recording an instrument executed and acknowledged by the declarant. It also says that the declarant can assign that right also.

What schools are being supported approximately 40k of homes of retired persons with no children in tv, each property paying approximately $1000 or more per year? How did they get along before the villages were built without that 40 million per year? I am sure the non villagers population has grown to support the businesses around and in tv but.. that is still alot of money. If they claim their school population has increased 40 million per year worth, Id sure like to see it.

I can't say anything about the bond. When I moved here, the bond was in the $6000 range which did not seem like a big deal. Now that is way up there, maybe a change is in order. But not adding it in is "business as usual".


What "Special assessment" are you talking about. I looked at my taxes and don't see one - for any year since I moved here.

I am not aware of the developer changing the deed restrictions. Can you cite some changes that were made to your deed restrictions? I know that they can change them for the different village that they cover when the deed restrictions are cast for that village.

The schools are by the school district. I am in Marion and I think we go up to Belleview. Some of the school taxes are a State requirement. If you think these school taxes are high you should live in NJ. These taxes are nothing. Anyway, we as a community should support the schools as they will educate our future leaders.

[TrudyM]

Most of us received a letter in May stating that how much is outstanding of the Bond Payment on our property. It's a 30 yr payment at 6.93%. When we pay our annual assessment there is also an additional "administrative fee" of $45 for the county to pay The Developer. Our home for example had an original bond of about $7000. When you do the math on these payments - one is paying about 7.5% to TD. The letter addressed the statement "Can I deduct the bond assessment on my property tax bill from my income txes at year-end?" The answer was "contact you accountant or financial advisor.....". The Villages with all their knowledge of what's legal for them to do "according to Federal law" knows full well that these are not deductible. It was addressed in the IRS audit again this past year. Now if one has an equity loan available on their home, one can take out the amount to pay off the bond and LEGALLY deduct that from income taxes. I guess from the legal standpoint AND not paying TD 7.5% per year and not being able to negotiate it down - the decision is easy to make.

Ok if the bond payment (that is collected for the developer by the county by coming on your tax bill) includes interest and principal, I don't understand why the interest portion isn't deductable. Is the interest and principal payment showed broken out. If not I don't see why. I was under the impression that Federal statutes required all reciepients of interest to send a year end breakout of the principal and interest paid,to the payee, so they can deduct the interest portion and don't mistakenly deduct the whole thing.
If this is not being done no wonder the IRS has problems with the developer.

Further if the county is charging an agency fee for collecting the debt for the bond holder(developer), It seems to me you should have the option of paying the bond holder in advance directly and avoid the $45 fee.

[Pturner]

I don't like the bond arrangement either-- the high interest rate, the inability to pay it down, the only-partial transparency. We did figure the bond into the purchase price of our TV home; and it was one of many reasons we purchased a resale on the northside.

But the developer has nothing to do with our payment of school taxes. By state law, schools are funded by county property tax. You pay them no matter where you live.

BTW, the previous generation paid for my education. The next generation is paying my social security. Whether that's right or wrong is a different subject. However, if we don't want care about the next generation, I think we'll be the first generation in America to feel that way. At any rate, resent paying local school taxes or not, the developer has nothing to do with that.

[JimJoe]

I don't like the bond arrangement either-- the high interest rate, the inability to pay it down, the only-partial transparency. We did figure the bond into the purchase price of our TV home; and it was one of many reasons we purchased a resale on the northside.

But the developer has nothing to do with our payment of school taxes. By state law, schools are funded by county property tax. You pay them no matter where you live.

BTW, the previous generation paid for my education. The next generation is paying my social security. Whether that's right or wrong is a different subject. However, if we don't want care about the next generation, I think we'll be the first generation in America to feel that way. At any rate, resent paying local school taxes or not, the developer has nothing to do with that.

I agree totally that the developer has nothing to do with school taxes. I did not say he did. I also have no problem paying school taxes as long as they are reasonably connected to need. I just don't see how an additional 40 million per year to this area in school taxes can be justified when none of those residents have anyone in school. Maybe that should be looked at.

It seems like the bond, the annual special assessment maintenance tax, and the school tax are examples of expenses that just need some attention.

TV is fantastic. Probably no better place in the world. That does not mean though that charges and expenses should not be clear and reasonable.

[zcaveman]

The special assessment is:
Non-Ad Valorem Assessments
Code Levying Authority Amount
0000000 UNIT 00000 SPECIAL ASMTS - MAINT $
which is assessed yearly by each district and can vary from district to district and from year to year.



On the Marion county tax bill it is listed as Villages Comm Development and it is an amount assessed by our CDD to pay for the annual maintenance costs in CDD4 (road repair, flowers, mowing, etc).

[JimJoe]

On the Marion county tax bill it is listed as Villages Comm Development and it is an amount assessed by our CDD to pay for the annual maintenance costs in CDD4 (road repair, flowers, mowing, etc).

I thought that is what property taxes are for. Thanks for the help.

[Autoshow]

Most of us received a letter in May stating that how much is outstanding of the Bond Payment on our property. It's a 30 yr payment at 6.93%. When we pay our annual assessment there is also an additional "administrative fee" of $45 for the county to pay The Developer. Our home for example had an original bond of about $7000. When you do the math on these payments - one is paying about 7.5% to TD. The letter addressed the statement "Can I deduct the bond assessment on my property tax bill from my income txes at year-end?" The answer was "contact you accountant or financial advisor.....". The Villages with all their knowledge of what's legal for them to do "according to Federal law" knows full well that these are not deductible. It was addressed in the IRS audit again this past year. Now if one has an equity loan available on their home, one can take out the amount to pay off the bond and LEGALLY deduct that from income taxes. I guess from the legal standpoint AND not paying TD 7.5% per year and not being able to negotiate it down - the decision is easy to make.

I wrote an article about the bond 5 years ago ,shortly after moving to the villages (almost exactly as yours) you are 100% correct on your posting.

[kentucky blue]

Let's ask:
Why is the bond not part of the listed price? Why dont all property listings SHOW the bond pay off? It is a lien on the property. I think the realtors should be required to tell you right up front. I think they should be required to list it next to the price since it is passed on with the land.

On my visit in May, the TV agents never mentioned the bond unless i brought it up, the MLS agent always let me know up front on each home.........What's with that???? !!!!!!!Anybody that does not consider the bond issue in their offer is an ill- informed purchaser, who is in for a shock.Also, i realized very early on, that FSBO's in TV live on a different planet, and have no idea about pricing a home in the real world.:shocked:

[Annabelle]

This whole bond issue is rather confusing to someone who has never dealt with this before.
We were told the bonds were used to build the "infrastructure" in TV. If this means such things as roads, community centers, street lights, etc, then why doesn't everyone pay the same amount for their bond since everyone uses and benefits from these things?

From what I have heard, unless you buy in Lady Lake you are going to be hit with a bond and the more expensive the home, the higher the bond. I still haven't been able to find out why homeowners in one county don't have a bond and yet the others do have one.

Now, I see that on top of paying this bond, the homeowner also has to pay interest on the bond at a rate of about 7% and this is not deductible? This whole bond issue is one reason why my husband and I are still unsure of whether to purchase a home in TV.

Annabelle

[The Shadow]

Then we have a second set of bonds that are paid for with half of the amenity fees. http://www.ocala.com/article/20090711/ARTICLES/907119991/1402/NEWS?Title=The-Villages-battles-IRS-over-tax-free-bonds