[Barefoot]

Originally Posted by Jim 9922

The bond is nothing more than allowing the builder to advertise a lower selling price and defer and officiate all the infrastructure costs. Florida is only one of a very few states that allow this, and it suckers in alot of out of state buyers..

Exactly!

[mickey100]

Jollyroger - what you say makes sense, and that is why people who have good financial common sense pay of their bond. If you are fairly certain you don't plan on buying another house in the next year or two, pay off your bond. Time flies quickly - 6 or 7 years down the road will be here before you know it, and you'll wish that $2K or $3K per year you were paying on the bond had been used to just pay it off initially.

[clod]

Agree with all of the above. Additionally, it seems that there is more awareness now of the bond cost associated with a house. You may not get it all back at a sale, but the house will sell faster. IMO, the state of the bond will become more of an issue as we approach build out, when all sales will be re-sales.

[buggyone]

Truly you should think of the price of the home is the selling price plus the bond balance.

I bought a resale home in October of 2009. The bond balance was about $2,000. Big difference than the $20,000 bond that lots of my friends got at the same time on a new home. It makes about $1,000 difference on the property tax bill every year. I would rather have that $1,000 for dinners out or other entertainment than pay it on the tax bill - but that is just me.

The bonds on new homes are now $23,000 to over $50,000. Folks, consider a resale!

[Rebel Pirate]

Originally Posted by Golfingnut

It is not tax deductible and yes the interest on it is high. Pay it up front.

OK, so the interest on the CDD bond isn't deductible on your federal income tax return. How about if your home in TV is an income producing investment, not your personal residence? Then is the annual interest payment a deductible expense for that property?

There may be a few tax attorneys or tax preparers on TOTV - if you reply and are one of those, please identify your professional experience. But everyone's opinion is welcome, especially if it's based on your personal experience in the same circumstances.

I really don't want to trip over the IRS rules. Thanks in advance!!

[CaptainMorgan]

Originally Posted by Rebel Pirate

OK, so the interest on the CDD bond isn't deductible on your federal income tax return. How about if your home in TV is an income producing investment, not your personal residence? Then is the annual interest payment a deductible expense for that property?

There may be a few tax attorneys or tax preparers on TOTV - if you reply and are one of those, please identify your professional experience. But everyone's opinion is welcome, especially if it's based on your personal experience in the same circumstances.

I really don't want to trip over the IRS rules. Thanks in advance!!

I am NOT a tax expert and I paid off my bond when I bought so I don't have any experience on paying off a bond included with monthly amenities (VCD). Here's my thoughts FWIW:

1. If you get a 1099INT statement on the bond each year, you can probably deduct the interst paid. If you don't get the 1099, then imputing the interest would proably not work (if audited). The IRS usually matches up your interest deductions with 1099s from financial institutions.

2. A sure way to legally deduct the interest on the bond is to get a home equity loan and pay off the bond. The interest on the home equity loan would for sure be deductible (and a lot less than 7%).

3. If I was buying new and had to have a mortgage, I'd put the house and bond on the same loan.

Personally, I like to keep my finances as simple as possible and not have any debt of any kind in case my investments tank again. Your mileage may vary.

Ed

[Joanned]

In this market environment 7% is hard to get on most investments
were moving into our new home in two weeks and paying off the bond I agree that you'd be better off borrowing money at 3.5% to do it if you don't have it
Jim d

[tag460]

We are going to pay off our bond when we get our first billing statement. Interest rate on our $20,000 bond is to high then add in the fees. With bank interest rates low, if we took out another type of loan to pay it off, we never have enough deductions to itemize on our taxes. We haven't had enough deductions on our taxes to itemize for years.

[graciegirl]

Originally Posted by mickey100

Jollyroger - what you say makes sense, and that is why people who have good financial common sense pay of their bond. If you are fairly certain you don't plan on buying another house in the next year or two, pay off your bond. Time flies quickly - 6 or 7 years down the road will be here before you know it, and you'll wish that $2K or $3K per year you were paying on the bond had been used to just pay it off initially.

When you try to sell your home here without the bond paid, you can advertise it for less.

We ran into someone we have known for awhile here just this week and they had just purchased their fourth home here, none of them for investment.

New people will be so surprised when they live here for awhile at just how much people will move from one home to another here and certainly without taking a financial loss.

In our new village of 53 homes we have at least a third who moved from another home in TV.

Homes are sold more easily, frequently without a realtor and moving services are far less expensive than in northern areas. People find they want a bigger home, or they may wish to downsize, or want a golf course view or wish to move from kissing lanais. Many new people will shake their heads and say ...we will NEVER move again, BUT, you may change your mind later................

I would say that the age of the resident has NOT much to do with it. Many want to change, and the change is not too difficult and so they move.

We were given that advice on this forum when we first bought here almost six years ago. So we didn't pay off the bond.

It is something to consider. Our home is paid off but not our bond. We sold and moved once, we may want to do it again, We are middle aged for The Villages. Early 70's and young at heart.

[Indy-Guy]

What will happen if you pay your bond off and a few months or years later you decide to sell your home with the bond paid.

1. Yes you will perhaps sell your house quicker if it does not have a bond if you take a loss on the bond.

2. Will you recoup the money that you spent on your bond? The answer is no. When someone tells you they are looking to purchase a home with no bond what they are really saying is they are wanting to do that because they feel that they can pay only 50 to 75 percent of the bond. Otherwise they would not be looking for a home with no bond since you can pay your bond off at anytime.

If you were a buyer would you pay the seller back what he paid the bond off for or would you try to steal the deal.

I do not feel that you will even be close to getting you bond money back at the time of sale. The money you would loose in the bond will be a lot more than the amount you would spend in interest and fees during the first 2 or 3 years. Pay your bond off only if you have decided that this is the home you will own for the next 10 or 20 years. I don't think that you will know that till you have lived in it for several years.

I waited 4 years before I paid my bond off and when I did my wife and I decided that this is our home for many many years to come. I do not regret waiting.

[gomoho]

Originally Posted by KeepingItReal

Fact is if you even get a portion of the bond back when you sell you will still come out ahead since you have not given away thousands in interest over the previous years. Should you sell after 12 years you will have paid out enough to have paid off the entire bond in full and will be trying to sell a home with 18 more yearly bond payments due which is still one and on half as many dollars as the entire original bond was to begin with. If you plan to sell in a year then maybe you would not want to pay it but each year you pay the interest and fee is actually an addition to the overall bond amount if you do pay it at some point.

A 12 year old house with the bond paid VS a 12 year old house with 18 more bond payments to go is no contest at all everything else being equal..and the owners of each of the homes has paid out exactly the same amount towards the bond. This will be even a larger incentive in the newer areas where the bond is very high compared to some areas.

The only flaw I see in your argument is "all things being equal" how often is that the case when looking at property???

Also the poster before you recommended waiting a few years to be sure this is the home you are going to stay in - that to me is a no brainer - why give away 20 thousand to save a few over a couple of years?

[mickey100]

Originally Posted by Indy-Guy

What will happen if you pay your bond off and a few months or years later you decide to sell your home with the bond paid.

1. Yes you will perhaps sell your house quicker if it does not have a bond if you take a loss on the bond.

2. Will you recoup the money that you spent on your bond? ... When someone tells you they are looking to purchase a home with no bond what they are really saying is they are wanting to do that because they feel that they can pay only 50 to 75 percent of the bond. Otherwise they would not be looking for a home with no bond since you can pay your bond off at anytime.....

Using the numbers that KeepingItREal provided, and looking at a scenario of 3 years. You don't pay off the bond, you spend with fees about $2K per year which is $6K on bond interest. The balance on the bond is still $21K. You sell the house "losing" $6K you spent on the interest on the bond. Now if the bond had been paid off and the buyer pays 75% of the bond, that would be $16K, so you'd be out the same amount of money. Plus having bond paid is a definite inducement to some buyers and makes your home stand out among similar homes. And of course, you have the added bonus of making money in the long run if you don't sell your house right away.

I think too, that people aren't selling houses so often as they might have in the past. Back in the 2005-2007 during the real estate boom, there were people buying, flipping, etc., which isn't happening now. I'd guess that most people buy now and stay in their homes. You will always have some turnover, but not to the extent it was during the booming real estate days. As I said previously, if you think you're going to keep your house more than a few years, IIMHO you'd be wise to pay off the bond.

[graciegirl]

Many of us being in the fall or early winter of our lives are not thinking about investment, taxes or how things will be in ten or twelve years.

We are making our decisions about where we want to live and in what and if we want to move for the fun of having a house that is even nicer for us here...... for the now of our lives....and we should.

How many of us are going to be here to see a thirty year mortgage paid off?

With that pleasant thought, I wish you good mornng.

[mickey100]

Gracie, I'm sorry to hear your negative outlook on your life expectancy. You are always so positive about buying a house and living in in The Villages, I expected that positive outlook to spill over into other areas.

Its important to note, many people age 60 and over are healthy and fit, and life expectancies have risen in the last decade, due to medical advances and better healthy lifestyles.

According to data compiled by the Social Security Administration:

A man reaching age 65 today can expect to live, on average, until age 83.
A woman turning age 65 today can expect to live, on average, until age 85.
And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

Unless there are health or other issues, many retirement planners advise having a financial plan that covers you up until age 90. With that in mind, I don't think it is financially smart to blow thousands on bond interest if one can easily avoid it.

[graciegirl]

Originally Posted by mickey100

Gracie, I'm sorry to hear your negative outlook on your life expectancy. You are always so positive about buying a house and living in in The Villages, I expected that positive outlook to spill over into other areas.

Its important to note, many people age 60 and over are healthy and fit, and life expectancies have risen in the last decade, due to medical advances and better healthy lifestyles.

According to data compiled by the Social Security Administration:

A man reaching age 65 today can expect to live, on average, until age 83.
A woman turning age 65 today can expect to live, on average, until age 85.
And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

Unless there are health or other issues, many retirement planners advise having a financial plan that covers you up until age 90. With that in mind, I don't think it is financially smart to blow thousands on bond interest if one can easily avoid it.

You are right as usual Mickey.

I intend to live to be 124, but just in case..........