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What’s A CDD And Why Should I Care?

moneyOK, first of all, you must be wondering what CDD stands for. In real estate, it stands for Community Development District.

Now that we have that out of the way, why should you care what a CDD is? Let me tell you so it doesn’t surprise you 8 months after you purchase your new home.

Some new homes are built in what is known as a Community Development District. The Miami Dade Property Appraiser has his own definition and a darn good one at that. It states… “The Community Development District – CDD” means a local unit of special-purpose government. A community development district may charge separate non-ad valorem special assessments for satisfying the debt obligations of the District related to financing, constructing, maintaining and servicing the District’s improvements and/or services.

If it still isn’t clear, I’ll spell it out real simply…it boils down to a larger tax bill. You will pay more money for property taxes than someone else with a home valued at the same amount but whose home is not within a CDD.

How much more? Well, that depends. It could be in the neighborhood of $800/yr to $1200/yr or more. It is totally based on the types of improvements and/or services that were constructed, financed and maintained and on the budget adopted annually by the CDD.

If you are buying a home that is part of a CDD it must be disclosed to you. However, you may have stars in your eyes as you check out that shiny new townhouse and completely gloss over the fact that this will be an additional expense on top of the mortgage, taxes, insurance and homeowners association, if any.

There are many new developments in Homestead, Cutler Bay and Miami which are in CDD’s and that impacts your monthly payment. Make sure you’re including the additional cost a CDD brings when you’re figuring out your numbers.

For instance a CDD which imposes an assessment of $984 per year is costing you $82 per month. With an extra $82 per month on a 30 year fixed mortgage with 6.5% interest rate you could afford to purchase almost $13,000 worth of extra house in a community without the extra expense of a CDD.

Make sure you’re including all of your monthly expenses when figuring out how much home you can afford.

Spoken by Maggie Dokic | Discussion: 26 Comments »

These articles are not intended to give legal or tax advice, and you should consult your attorney or financial advisor for additional information.

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