[Challenger]

In fact, there was a difference in price. If comparable houses with and without bonds were sold at the same price, the actual consideration for the "Bond" house was higher by the amount of the bond.

A statement that the price is the same is a sales agency subterfuge. A house with a bond in essence has a lien superior to a mortgage and is a preferential claim on your equity.

Pose the question to a CPA, a Certified RE Appraiser, and then to a RE sales agent.

[Chi-Town]

When buying my house one of the features was no bond. I thought" that's nice" but it made no difference in my negotiations as I didn't know about bonds here.

[BrianL99]

Originally Posted by petsetc

I think of the bond as an assumable second mortgage that is attached to the house and is not included in the sale price. So as I see it, the actual price of the house is the sales price PLUS the remaining bond balance. Or to put it another way, you must pay the sales price in full PLUS the remaining bond balance in full to claim your house is free and clear.

I do not believe you can recoup the bond pay-off in a resale unless the bond is at the end of its term. I have chosen to think of it as "just one more thing" not to think about except at tax time.

In my limited ownership of 8 years, I do not remember anyone fretting about the bond, one way or the other.

JMHO

That's exactly what it is. Essentially, an assumable 2nd Mortgage (that's in a 1st position, like taxes). It's good to see someone post a clear, concise and accurate answer to the OP's question.

[villagetinker]

Also, as far as I know, the bond payments and interest are NOT deductible on income taxes. A few years ago, the bond interest rate was higher than our income interest rate, we made the decision to pay off the bond, today it would be the opposite. My point there are several things to consider. IMHO, figure out your planned monthly budget, and see if the additional bond expense is a deal breaker.

[BrianL99]

Originally Posted by villagetinker

Also, as far as I know, the bond payments and interest are NOT deductible on income taxes. .

That is correct from what my CPA told me.

Many people simply deduct them, because it appears as "Taxes" on the payment to the County and unless there's an Audit, the IRS may not catch it. Not that anyone in TV would cheat on their taxes.

I assume (but don't know), that they can be capitalized as part of the home's purchase price? Surely they can be, on Investment property.

Are CDD Fees Tax Deductible? A New Homeowner's Guide

Are CDD Fees Tax-Deductible?

[kkingston57]

Originally Posted by CoupleNCA

We visited the Brownwood TS to introduce ourselves and interest. But the realtor we were assigned on our first in-person visit has refused to answer one of our most basic of questions multiple times (she seems to keep copy/pasting the same answer to my very direct question).

My simple question is this: We've seen several really nice properties that promote the fact that they're "NO BOND". As if it was some huge savings or advantage. I just want to know: "What is the average real-world saving on a property with a bond vs. no-bond?"

The sales brochures shows the monthly fees as "bond+maintenance+fire" so you can't gauge what percentage each makes up.

I totally understand the concept of the bond and I totally understand why each "Villages" bond may differ in terms of price. But we're merely trying to ascertain if a property being highly-promoted as "NO BOND" is really that significant and should be given priority in our choices.

Can anybody please answer this question honestly? My assigned realtor can't or won't.

Forget about the bond price and look at the bottom line. New house + Bond = Full Cost of house. No bond house is the full contracted price of house.

[charlieo1126@gmail.com]

I’ve sold 5 homes here in villages I did not pay the bond off on any of them .there are people who will try to offer you the price for the home after they deduct the bond those bids are quickly shot down . I’m not sure but I think the longest it took to sell one of my homes was about a month . it’s nice if you find a house with no bond but.I don’t think it’ll be much difference in price from one with the bond ,

[pauld315]

Originally Posted by CoupleNCA

We visited the Brownwood TS to introduce ourselves and interest. But the realtor we were assigned on our first in-person visit has refused to answer one of our most basic of questions multiple times (she seems to keep copy/pasting the same answer to my very direct question).

My simple question is this: We've seen several really nice properties that promote the fact that they're "NO BOND". As if it was some huge savings or advantage. I just want to know: "What is the average real-world saving on a property with a bond vs. no-bond?"

The sales brochures shows the monthly fees as "bond+maintenance+fire" so you can't gauge what percentage each makes up.

I totally understand the concept of the bond and I totally understand why each "Villages" bond may differ in terms of price. But we're merely trying to ascertain if a property being highly-promoted as "NO BOND" is really that significant and should be given priority in our choices.

Can anybody please answer this question honestly? My assigned realtor can't or won't.

Bonds are meant to hide the true cost of a house from appraisers. Most likely, if the cost of infrastructure was rolled into the price for a home, no bank would be able to justify giving you a mortgage. But, when you go for a loan and 40 or 50K is in another bill, your house will appraise correctly for a mortgage

[retiredguy123]

Originally Posted by BrianL99

That's exactly what it is. Essentially, an assumable 2nd Mortgage (that's in a 1st position, like taxes). It's good to see someone post a clear, concise and accurate answer to the OP's question.

The difference between a mortgage and a bond is that a mortgage is a personal debt against the property owner. But, a bond is a debt against the property itself, not the owner. So, the owner can be sued for non-payment of a mortgage, but they cannot be sued for non-payment of the bond.

Also, I don't think an appraiser or a bank considers the bond when calculating the collateral or loan value of the property.

[tophcfa]

It’s not rocket science. Add the principal amount of the bond to the price of the house. It’s money the homebuyer is obligated to pay, unless they sell the home and pass on the remaining unpaid obligation to the next buyer. If two identical homes are priced the same but only one has a bond, it’s a no brainer, the one without the bond is a better value.

[retiredguy123]

Originally Posted by tophcfa

It’s not rocket science. Add the principal amount of the bond to the price of the house. It’s money the homebuyer is obligated to pay, unless they sell the home and pass on the remaining unpaid obligation to the next buyer. If two identical homes are priced the same but only one has a bond, it’s a no brainer, the one without the bond is a better value.

True, but, in most cases, the buyer is not willing to pay the bond principal.

[GoRedSox!]

I think most folks no longer itemize deductions after the Tax Cuts and Jobs Act of 2017, and if they do, State and Local Taxes (SALT) has a $10,000 cap on the deduction. That being said, most of the provisions in that tax cut were temporary. It was passed under Reconciliation in the Senate which avoided the filibuster, and because the law added to the national debt, the provisions were made temporary and most are set to expire after 2025. It will be interesting to see if Congress acts to extend them or if they will revert to the pre-2017 tax code. If it does, the standard deduction will go back down and many more folks may go back to itemizing and the deductibility of the bond may be more of an issue. It may not be mortgage interest, but is it a tax?

We chose not to pay off our bond because the interest rate on the bond is lower than the current interest rates for savings. That equation could change going forward and we will keep our eye on that. The bonds in the new sections in the South are more expensive not only because the bonds are higher, but so is the interest rate. A bond of $40,000 with an interest rate of 5.47% carries an annual payment of a little over $2,900.

[Topspinmo]

Originally Posted by BrianL99

That is correct from what my CPA told me.

Many people simply deduct them, because it appears as "Taxes" on the payment to the County and unless there's an Audit, the IRS may not catch it. Not that anyone in TV would cheat on their taxes.

I assume (but don't know), that they can be capitalized as part of the home's purchase price? Surely they can be, on Investment property.

Are CDD Fees Tax Deductible? A New Homeowner's Guide

Are CDD Fees Tax-Deductible?

IMO Everybody tries cheats on taxes why they have so many exemptions. Why federal will never go to flat tax? Lawyers make rules so lawyers can get paid long with down steam associations like IRS, CPRs, tax negotiators services, and tax prepare services. IMO flat tax ONLY fair way, no deductions you make this you pay this, I don’t care have many kids you have, how many charities, or foundations you have. But, that will never happen cause
rich will never pay their share. Yes I can have opinion.

[retiredguy123]

Originally Posted by GoRedSox!

I think most folks no longer itemize deductions after the Tax Cuts and Jobs Act of 2017, and if they do, State and Local Taxes (SALT) has a $10,000 cap on the deduction. That being said, most of the provisions in that tax cut were temporary. It was passed under Reconciliation in the Senate which avoided the filibuster, and because the law added to the national debt, the provisions were made temporary and most are set to expire after 2025. It will be interesting to see if Congress acts to extend them or if they will revert to the pre-2017 tax code. If it does, the standard deduction will go back down and many more folks may go back to itemizing and the deductibility of the bond may be more of an issue. It may not be mortgage interest, but is it a tax?

We chose not to pay off our bond because the interest rate on the bond is lower than the current interest rates for savings. That equation could change going forward and we will keep our eye on that. The bonds in the new sections in the South are more expensive not only because the bonds are higher, but so is the interest rate. A bond of $40,000 with an interest rate of 5.47% carries an annual payment of a little over $2,900.

The bond is not a tax. The interest on the bond is not tax deductible because, unlike a mortgage, the bond amount is not based on the value of the house. The bond interest is listed in the non-ad valorem section of the tax bill because it is not a tax and it is not "based on value" which is what "ad valorem" means. You cannot deduct anything in the non-ad valorem section unless the house is rental property. Some people deduct the bond interest on their income tax return because they either don't understand that it is not deductible or because they are cheating. Actually, you can deduct anything you want on your tax return as long as the IRS doesn't catch it.

[Topspinmo]

Originally Posted by retiredguy123

The difference between a mortgage and a bond is that a mortgage is a personal debt against the property owner. But, a bond is a debt against the property itself, not the owner. So, the owner can be sued for non-payment of a mortgage, but they cannot be sued for non-payment of the bond.

Also, I don't think an appraiser or a bank considers the bond when calculating the collateral or loan value of the property.

Cause it separate loan.