I think there is a question on the deductability... and I believe that many/most TV'ers deduct in the face of ambiguity. I bet if you asked the IRS - you might get differing answers (shocking!). Sometimes asking for forgiveness is better than asking for permission.

Problem is would not the IRS look extra careful on returns coming from V illages addresses? And if you make a mistake and underpay, you will be charged interest and penalty. Plus, they may go back many years.

Deducting Home Interest may go away anyway with tax reform.

I'm with you on this, penalties/interest not when the waters are this muddy, they would be waived.

Thank you. At some point, I'm going to call the IRS and have this conversation about a rental situation. When I do, I'll let you all know what they say.

I would bet you'll find that no part of the bond payment is deductible.

I love research. After reading Jimbo's post above re IRS Topic 503 and thisIRS General Counsel letter I found via this link --http://www.irs.gov/pub/irs-wd/12-0018.pdf--I have a different take on deductibility of Bond interest and CDD taxes. I would deduct them both unless I read something different. I think we were just told the "bond" wasn't deductible. I don't think we asked about the interest.

I did taxes in WA state where the items in the CDD tax were part of our regular tax bill. We had a LID (Lake Improvement District) which is a special, costly assessment and this was deducted along with other assessments as part of the total property tax. I worked for a large firm and this was SOP.

The General Counsel letter also has some interesting things to say about "ad valorem" taxes.

Anyone planning to call the IRS for clarification--you will not get the same answer from any two people at the IRS and the verbal response can be overturned should you be audited.

Thanks for all the discussion on this subject.

Oh, I love these newbie replies. It is going to be interesting to see how many of them get hit for interest and penalties if they try to deduct bond interest.

Best idea, folks, pay off your bond by taking out a home equity loan. The interest on a home equity loan is less than the bond interest and that is deductible for the IRS - unless an un-named candidate gets his way (not a political statement, Moderator, but just information).

Tangible Property Reminder
 

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More from the 'newbie'. Why in the world would I get a home equity loan and deduct a few bucks over the next 5-7 years before I sell my house and effectively 'eat' the $20,000 bond cost? I want to transfer the bond to the buyer and this isn't going to happen with a home equity loan. To each his own.

You are buying your home in The Villages with the intent of selling it and moving in the next 5 - 7 years? I bought my home here in The Villages to stay in and not to move again. But, as you say, each to their own.

Also, when I bought my re-sale home 3 years ago, it had only a $1,500 bond on it. Friends bought their new homes at the same time and have a $20,000 bond. I understand now that bonds on new homes are higher than $20,000 and go up to $50,000. Just another reason to look at re-sales.

Buggy. You know I agree with you on almost everything but many resale homes have high bonds because they are newer.

Now this could be that people plan to sell their new home for a variety of reasons. They may be planning to change the size of their home when they go from being a snowbird to a frog, or they aren't sure about this place being too good to be true and know that adding the price of the paid off bond into the home's price when resold makes it appear to cost more to the unitiated.

My guess is that most do not pay off the bond at the beginning, even if they pay cash for their homes....but I could be wrong.

Not sure why U keep saying 50K, all the designers R about 20K.

That monster is only about $100 a month

I realize you're pro resale but.....

As a former fed for 30+ years that worked closely with the IRS they only tend to focus on obvious, willful cheats. Close calls in law where a reasonable person could assume they were in compliance will not raise their concern - especially, if there are no other 'issues" with your returns. At worse, you might need to pay additional tax...the penalty and interest will be waived. And, it's not a sure thing that you can't deduct the interest. For the most part, this is too small of an issue for IRS to address unless they are going after a larger target - the whole Morse business structure which is more vexing than the issue of bond interest deduct-ability. Remember, you are dealing with an agency with limited resources...they focus on the important sentence and a couple of hundred dollars a year in deductions (that might be OK) isn't that sentence.

Designer homes south side of TV are in the 20K TO 25K range,but there are many premiers in the 40K to 50K range.For the individual who wants to call the IRS about getting a competent answer to a tax question,you obviously have never spoken to them before.Find an accountant who specializes in real estate tax law and he/she will tell you,good luck with your audit if you try to take those deductions.

I have and get different opinion from each one I spoke to, do you think a $1300 deduction is what they are looking to audit.....with their staff they look at much bigger fish to fry I think.

The number of premier homes are in the minority lets stick with those of us this can effect most.

It's your choice to take it or not.