When I tell buyers what the MUD taxes are for a property, Many times I get an Odd Look from them. Some are timid to ask what they are. MUD taxes are the Municipal Utility District taxes. Basically since the home is in the County and not in Houston, they have this tax for your Water and Sewage. There are Hundreds of MUDs in the area. Basically, a MUD is created when a subdivision is developed with Bonds, to handle the Water and Sewage. Sometimes a New Subdivision can connect to an existing MUD and some subdivisions ( especially large ones ) may have multiple MUDs.
MUD taxes can range from .25 cents to $1.49 or more in some subdivisions.
Why such a big difference depends on Age of the MUD and how many homes are part of the MUD.
Typically, as a New Subdivision builds out and gets older, the MUD tax will go down. I like to say as More People Share the Pie and Pay off the Bonds that created the MUD, the MUD tax reduces.
BUT, there's always a But, this is not always true. It has become more common for a MUD board to add in items for the benefit of the subdivision and this keeps the MUD tax from going down. This is my own personal opinion, but new MUDs are sometimes run by the developer and they will move some cost of developing the subdivision over to the MUD to save them money.
I think its very important for Buyers to look at the MUD tax for the subdivision and calculate this into their monthly payment.
A subdivision like Longwood Village has a MUD tax of .32 cents per hundred and if compare the cost of a $350,000 home in Longwood to The Bridgelands where the MUD tax is $1.49
- $1,005 MUD Tax for Longwood
- $4,078 MUD tax for The Bridgelands.
This is a difference of $3,000 per year in MUD Taxes. or about $250.00 per month.
This also equates to how much home you can buy.
- Basically if use a standard of $6.00 per $1,000 for cost of a loan. Using the example above -
$250.00 / 6 = $43,000 , or more buying budget for a home in the low MUD tax than a home in the Higher MUD Tax.
If you would like more information on MUDs and how they effect your monthly cost and buying power, Give me a call or email.