[TOTV Newbie]

Is the bond or the interest on the bond federally tax deductible?

What is the interest rate y'all are paying on the bond?

Do you prefer to pay the bond off over 30 years or just bite the bullet all at once?

[Kelsie52]

Originally Posted by TOTV Newbie

Is the bond or the interest on the bond federally tax deductible?

What is the interest rate y'all are paying on the bond?

Do you prefer to pay the bond off over 30 years or just bite the bullet all at once?

Bond interest not deductible
Bond interest differs according to area I have seen from 5 to 7.5 %

Paying off bond depends on your situation IMHO if you will stay in your home and do not intend to move and you can afford it ---pay it off .... if not pay yearly -it is included in your tax bill..

Good luck

[retiredguy123]

Your tax bill has two parts, the ad valorem part and the non-ad valorem part. "Ad valorem" means "based on value". The ad valorem part is tax deductible on your Federal tax return, but the non-ad valorem part is NOT deductible. The non-ad valorem part includes the bond principal and interest payments and the maintenance fee for the common areas of the development. These are not based on the specific value of your house, and, therefore, they are not deductible on your Federal tax return.

[Villageswimmer]

Ours is 6.125% ! They also charge an "administrative fee" annually for being so kind as to collect it. Check your amortization statement.

[twoplanekid]

Do you prefer to pay the bond off over 30 years or just bite the bullet all at once?


When selling a house in TV, bond is paid notice is a nice selling tool but doesn’t seem to actually help increase the value/selling price of the home. The fair market values of homes in TV do not include the bonds remaining balance.

[njbchbum]

You might be interested in reading this site re Villages bonds:
Residential Bond Assessment Information

[retiredguy123]

I hate debt, but, in my opinion, you should not pay off the bond unless you plan to keep the house for a long time. Houses with a bond may be more attractive to a buyer because the buyer has the option to assume the bond or to pay it off. However, if you pay off the bond, you remove the buyer's option because the bond cannot be reinstated once it is paid off.
Of course, a house with a paid off bond is more attractive than one with a bond if the price is the same. But, if you pay off the bond, you need to raise the price to get your money back.

[dewilson58]

TALK TO A TAX EXPERT...............not Villagers.

Different tax professionals take different positions and they can tell you how aggressive each position is.

I'm quite happy with the aggressive position I have taken.

[biker1]

There is no free lunch. If you buy a used but relatively young designer home, you are probably looking at $1600/year bond payment. If the bond was paid off, the house should sell for more money because the new buyers would have $1600/year less expenses. The higher price would result in a larger mortgage but it should be a wash. I suspect most people can't do the math and the real estate agents can't explain it. Too bad ...

Originally Posted by retiredguy123

I hate debt, but, in my opinion, you should not pay off the bond unless you plan to keep the house for a long time. Houses with a bond may be more attractive to a buyer because the buyer has the option to assume the bond or to pay it off. However, if you pay off the bond, you remove the buyer's option because the bond cannot be reinstated once it is paid off.
Of course, a house with a paid off bond is more attractive than one with a bond if the price is the same. But, if you pay off the bond, you need to raise the price to get your money back.

[biker1]

Our tax code is pretty much based on the honor system. You can talk to as many tax professionals as you want but the bond interest is not legally deductible. If you are deducting it, you should hope that you don't get randomly audited. The chances of a random audit are slim. If you want to legally deduct it, take out a home equity loan and pay off the bond and then deduct the interest on the home equity loan.

Originally Posted by dewilson58

TALK TO A TAX EXPERT...............not Villagers.

Different tax professionals take different positions and they can tell you how aggressive each position is.

I'm quite happy with the aggressive position I have taken.

[rjm1cc]

As stated not deductible. The cost of your house is not deductible either. Consider the bond as part of the cost of the home. If you are going to have a mortgage see if the lender will led you enough money to pay off the bond and the mortgage interest is deductible.

[twoplanekid]

I don't believe that the bond has any influence on the appraised value for a lending institution on a house in TV. It didn't for me on my house in 2014.

[LuvtheVillages]

If you itemize your deductions (schedule A), you can deduct the interest portion of your bond payment as mortgage interest.
You can find the break out of interest vs principle vs admin fee for your home on the Villages governance web site.
It is mortgage interest because the bond is secured with a lien on your home.

[dewilson58]

Originally Posted by biker1

Our tax code is pretty much based on the honor system. You can talk to as many tax professionals as you want but the bond interest is not legally deductible. If you are deducting it, you should hope that you don't get randomly audited. The chances of a random audit are slim. If you want to legally deduct it, take out a home equity loan and pay off the bond and then deduct the interest on the home equity loan.

[retiredguy123]

Not true. The interest portion of your bond payment is not deductible. It is a non-ad valorem payment, not based on the specific value of your house, not the same as mortgage interest, and it is not deductible. It is also why the county provides a separate accounting on your tax bill for ad valorem and non-ad valorem payments. The bond interest is included in the non-ad valorem section of the tax bill. This is the IRS and the TurboTax interpretation of the Federal tax laws. But, you can deduct anything you want as long as you don't get audited.