What is the difference between PID taxes vs. MUD taxes in developments in Texas?


PID vs. MUD has been coming up a lot lately from my clients.

In rural area developments in Texas like Mustang Lakes and Lilyana, new buyers will hear the terms PID and MUD.

Mustang Lakes in Celina.

“The purpose for these “special assessments” is to fund new infrastructure to the development when the standard tax base alone is insufficient.”

MUD Taxes, or Municipal Utility District assessments, and PID Taxes, or Public Improvement District assessments are above the standard property taxation.

MUD taxes have no expiration date! They will stay with the Home from one owner to the next. As more homes are constructed in MUD districts, MUD taxes can decrease or be eliminated over time. But that rarely happens.

PIDs, unlike the tax rates for MUDs, are fixed once the bonds are sold.  This means a homeowner will know the annual assessment bill at closing.  PID assessments can be paid in full up front, versus prorating year by year during the years the PID is active. PID’s have a set time and can run out on a specific date.

Mustang Lakes and Lilyana, both are communities with PID assessments or MUD taxes, have slightly lower home pricing to reflect the added tax burden. Some developments eliminate PIDs and MUDs all together by adding the expense on to their lots.

At the rate the Prosper-Celina area is growing, there is an overage cost for new infrastructure that does not have a sufficient tax base to fund development.

Currently there are more than 900 municipal utility districts in Texas. They are not uncommon and also should not be a reason for buyers to choose a different community just because of them. New home buyers just need to be informed and educated about it.

There is one advantage for these taxes strangely. Both MUD taxes and PID assessments are tax deductible! So in a way, they really don’t affect your bottom line.

“For more on the newest developments in Frisco, Prosper or Celina like Mustang Lakes and Lilyana, text or call Brad Holden today at (469)733-2723.”

BRAD HOLDEN – HOLDEN NEW HOMES – LICENSED TEXAS REAL ESTATE BROKER

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