What Is A Municipal Utility District How Does It affect Homeowners?
Municipal Utility District primary function is to provide water, sewer, services in areas where services are not available. Municipal Utility District typically financed through the sale of bonds which, are serviced by the taxes levied and collected by the MUD. From an engineering and land development point of view, getting familiar with the MUD requirements are a must. When the subdivision gets built out the MUD rates usually decline over time . This doesn’t affect who you get your water from it is just a tax, because it took the developer an extra cost to get the local utilities out that far. If you live in a neighborhood that has a mud tax but is not out very far, the likely fact is that when it was developed it was out pretty far from the rest of the world such as Trophy Club.
How much Extra is Multiple utility districts and how does it affect me?
Bond money that was borrowed to complete the development is different at every subdivision because it is based on the size of the subdivision, development can last for 8-15 years. So the final, exact amount may not be known for a number of years. My research shows in the DFW area, it can be anywhere between $65.00 to $300.00 extra a month. Typically if homeowners are willing to pay this extra tax it usually keeps the neighborhood values up, it weeds out the riff-raff. Here is the actual rate I pulled from the tax rolls for a house in Live Oak in Fort Worth. This is based on a house that is valued at $280,000 Dollars.
My research shows in the DFW area, it can be anywhere between $65.00 to $300.00 extra a month. Typically with that being said it usually keeps the neighborhood values up, if homeowners are willing to pay this extra it weeds out the riff-raff. Here is the actual rate I pulled from the tax rolls for a house in Live Oak in Fort Worth. This is based on a house that is valued at $280,000 Dollars.
This homeowner can expect to pay an extra $231.71 a month
|Live Oak Creek Mud||$2,780.63||Estimated||.99|
What is Mud Tax?
Homeowners are taxed to pay off the Debt utility District has created with bond money. Don’t worry that you are paying extra to live in a MUD district. In a regular development, the prices of the houses are typically higher to cover the water and sewage development. Developers have to pay for it, of course, they pass it on to the homeowner. From the definition below, it looks like the mud taxes never go away. If someone knows for sure on this please comment below, I would like to know.
Is A Municipal Utility District tax a deductible Tax?
It’s deductible as a real estate if the tax is based on the value of your property. You would add the MUD tax to other real estate taxes and enter the total under Property taxes. It is not deductible, However, if the assessment is not based on value, it’s not considered a property tax. From the Local research I have done in Tarrant county it is part of your Property Tax. However always check with your CPA.
Trophy Club and Live Oak Creek are the only 2 MUD’s I could find in Fort Worth. I would consider living in both and not even worry about being in a Mud. Consider this extra expense, coupled with an H.O.A. payment, to get to live in a desirable area. Homeowners probably need to purchase in another area if worried about this tax, because it is a sure sign of unaffordability. To find out if the neighborhood you want to purchase, is a Municipal Utility District. Check with your favorite local realtor, your counties appraisal district, or sellers disclosure.