So I’ve been seeing a lot of new construction projects coming out and there are such great prices. People see it and say, “Man, this brand new home is priced the same as a home that’s 20 to 30 years old. Carlos, What do you think? I have had some buyers that were really interested in putting an offer on some of these properties and I talked them out of it.
The reason why is, there’s something called CDD tax. This CDD tax is a community tax that basically charges you for the roads, clubhouse sidewalks, and many other things. This tax is going to be part of your taxes and it doesn’t show up until after the first year. So you might be paying for example, on a house that’s $200,000, $1,500 a month and you qualify right away for those $1,500 a month.
Developers give you a lot of incentives if you use their lenders. And you know what happens is that in the first year you’re paying $1,500 a month, but in the second year, that fifteen-hundred jumps up to like $2,200 because of that CDD tax.
Now, the beauty of this is you might have to be paying this in most cases for 20 to 30 years. So imagine, that payment that you thought was $1,500 you’re going to be paying $2,200 hundred for 30 years and it comes out as part of your taxes. There’s no way around it and the worst part is when you go sell it, that’s still going to be there. It’s not going away, making it very difficult to sell that property in the future.
What these developers do is, they give you a lot of incentives to use their lender. For example, they might give you 5,000 in closing costs if you go with them. It is hard to beat that, but the problem with the lender is, I don’t know if they’re disclosing that the CDD tax is going to be there.
The reason why I feel that they’re not disclosing is that I see a lot of these properties go for sale a year after they are done constructing, 20-30 of them at the same time for sale. That tells me that those buyers probably were not aware of the CDD Tax. If they knew about this, why are they selling at a year right after they close? I’ve also seen a lot of short sales on the market with the CDD tax.
My opinion is that many are not disclosing this. I hope they are. But I’ve talked to people that bought with the CDD tax and when I ask them if they knew about it, they say, “No, we didn’t know about it” and that’s very sad. At least know what you’re up against and so you make an informed decision upfront.