How Master-Planned Communities Utilize a MUD Tax in Texas

The process of finding and buying a new home is exciting and life-changing, and it can be quite educational, as well. In the course of choosing a new home and navigating the whole mortgage and home-buying process, you may learn all about homeowners associations, how to calculate a mortgage payment, and all kinds of new homebuying terms.

One other thing that you’ll want to learn about before signing all that paperwork is the taxes you’ll be paying on your new home. Those who already live in Texas know that the state offers great benefits in terms of favorable tax rates for homeowners. However, there are also unique taxes that the state charges for specific districts that you should be aware of before you buy a home. One of these is a Municipal Utility District (MUD) tax.

The homes at the Sandbrock Ranch master planned community in North Texas are zoned to Denton County and also fall within a special district with a Denton MUD tax. Many benefits come along with being part of our Special District Denton County MUD, and the tax revenues help to support them all. For example, these tax revenues support building and maintaining roads and other infrastructure within the MUD.

Many new homeowners may not have even heard of a MUD tax before now, however, and so we wanted to give you a quick breakdown of how it all works and what the benefits are for you as a homeowner. Without further ado, here are some of the basics about MUD taxes:

  • A Municipal Utility District or MUD is a special governmental entity created by the State of Texas.
  • Though MUDs come in a wide range of sizes, most of them are set up to serve master-planned communities like Sandbrock Ranch.
  • The revenues from a MUD tax in Texas go toward funds for the development of the communities that they serve, and these funds pay to install utilities and new amenities for all residents. MUD tax revenues maintain roads and water services (Sandbrock Ranch is served by the Mustang Special Utility District), drainage, and sanitary sewer facilities, to name a few.
  • The MUD tax pays for its own bonded indebtedness, as well as general maintenance and operating expenses.
  • You’re not actually paying an extra tax when you live in a MUD. The annual property tax bill from the MUD takes the place of the normal city tax you would otherwise pay.
  • The tax rate for Denton MUD #6—where Sandbrock Ranch is zoned—is $1 per $100 of assessed property valuation.
  • While tax rates for MUDs vary, they generally decline over time as the operating and debt service costs of the entire MUD are shared across a growing number of homeowners who move into the MUD.
  • Once the bonded indebtedness of a MUD is retired, it is usually dissolved, and the property previously governed by the MUD becomes part of a city.

That’s the gist of how a MUD works and how it can benefit homeowners who want the best utilities, amenities, and resources without paying the highest prices. If you’re looking for a new home in a master planned community in North Texas, we’d love to have you join our neighborhood. Just click the link to check out our Home Finder tools or fill out the form for more information.

Sandbrock Ranch is a place where families, friends, and neighbors come together to enjoy the “Live True” lifestyle that only exists here in the heart of North Texas. Whether you’re looking for your first home or your forever home, we have the perfect home for you and your family at the Ranch!

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