If you’re interested in buying a home in Orlando, Florida, the CDD fee should be among the first few things you must be familiar with. As the name indicates, the Community Development District (CDD) fee is the additional fee for the overall community improvements that home buyers in Orlando, Florida, must pay.
Still, many people moving to Florida are often unaware of the CDD fee and get confused when it comes attached to their home mortgage.
How much is the CDD fee in Orlando, Florida? What is its primary purpose? How does it differ from HOA? These are some of the most frequent questions among new home buyers relocating to Florida, which we’ll answer in this article.
What is CDD fee in Orlando, Florida?
CDD stands for Community Development District, a fee homeowners in Florida must pay. It typically ranges between $120-$2000+ annually and is incorporated into your annual property tax bill and not paid separately like the HOA fees.
The CDD emerged as alternative financing for a community’s infrastructure that the financially stretched municipalities cannot pay under the Uniform Community Development Act of 1980. It operates as an independent tax district and is a special-purpose local government unit aimed at issuing issue tax-exempt bonds for building infrastructure.
CDD is charged to finance the services and infrastructure costs of the community, such as repairing and installing new roads, constructing or repairing schools, and maintaining sewers, sports courts, community pools, parks, and sidewalks.
No wonder Florida has become a premium residential attraction for people looking to move and buy homes, boasting gracefully closed neighborhoods with a wide range of incredible amenities, such as sports courts, pools, and beach clubs.
A CDD fee only lasts for a set period-20 to 30 years. Typically, it is created in Florida because the community developer does not absorb part of the initial cost of building the community.
Does CDD Fee in Orlando, FL Mean Higher Taxes Than Other Places?
The builder and County Commissioners structure the CDD fee before the development of the land. County politicians endorse them because they increase property values and create infrastructure. Builders love them because they don’t have to use their own money to pay for infrastructure development upfront.
What does this mean to a home buyer in Florida? Does it mean you will pay a higher tax bill if your property is part of a CDD District?
Although CDD fees are technically not taxes, the District’s charges will appear on your property tax bill for the next 30 years from the year of construction. Home buyers moving to a 10 year old development can expect to pay it for 20 years until they pay off their loan.
Many disagree with this financing mechanism and consider it the responsibility of the developers. However, there’s nothing better than living in a district with additional advantages and great amenities. Wouldn’t you prefer to buy a home in a place where the streets drain perfectly if there’s heavy rain?
How Does CDD Works in Orlando, FL?
CDD fee is comprised of two parts:
- Bond: A fixed amount charged to cover the costs of infrastructure, development, and amenities for a community that homeowners in Orlando, Florida, typically pay over 20 to 30 years or in advance.
- Operations and Maintenance: This amount is not fixed and fluctuates from year to year and covers the costs of maintaining ad operating the community and its amenities.
Both are added together to a home buyer’s property tax bill as part of their monthly mortgage payment. Thus, you do not have to worry about remembering to pay with this worry-free payment system.
All communities with a CDD also have an HOA, but it is common for there to be only one HOA.
Let’s find out the differences between the two!
Orlando CDD Fees vs. HOA Dues
The so-called HOA fee is the one that each owner must pay to their homeowner association so that they can cover the maintenance of the condominium and other expenses related to the community’s best interest. It is considered one of the main expenses related to property in Florida. That’s why it’s important to always ask your real estate agent what’s included in the HOA for the community where you’re buying a property in Florida.
Many homeowners in Florida confuse CDD fees with HOA dues. However, they are entirely different in a number of ways:
- Local governments assess the CDD fees, whereas the homeowners association itself collects HOA.
- Generally, the size or cost of the development determines the CDD fee; however, HOA is typically fixed regardless of the property’s size or cost, which the homeowner has to pay monthly or annually.
- CDD is incorporated into the annual property tax bill and is not paid separately. HOA is charged separately monthly, but it is very common to be charged quarterly or semi-annually.
- CCD fee is charged to a community’s residents to finance specific infrastructure or amenities meant for them in the said community. However, HOA generally covers the costs of general maintenance and development operations.
How Can an Experienced Orlando Realtor Help You With CDD Fee?
Although CDDs are becoming common, they aren’t widespread, and many people buying homes in Orlando are not duly informed about them or overlook them due to the large volume of documents received. On the other hand, some owners pay their obligations without asking questions or solving specific doubts.
In addition, information about the CDD fee is often not displayed logically in local MLS listing sheets, causing confusion among home buyers when they see higher taxes than the actual.
To avoid any unwanted surprises, it is important to determine the total cost collectively when buying a home in a CDD district, including property tax, HOA, mortgage, and insurance. It would not be a fair evaluation to determine the CDD fee individually.
In this regard, only a well-versed and experienced agent can help you determine the total costs and sign a CDD disclosure, so you know the exact annual fee and the payment method.
Interested in Buying a Home in Orlando, Florida?
If you’ve decided and are ready to buy a home in Orlando and benefit from the great amenities, accompany yourself with an experienced realtor for a smooth and worry-free process.
Mike Chen is a trusted local realtor in Orlando with years of experience providing top-notch and reliable services to home buyers. Being a leader in Orlando’s real estate industry with hundreds of successful deals, our clients entrust their home-buying journey to us. We will take care of everything from helping you find great properties, determining the CDD fee you’re interested in buying, and the overall costs to signing the CDD Disclosure.
Get in touch with us to discuss your needs!
Additional CDD resouces
https://www.floridaforboomers.com/florida-cdd-bonds/
https://www.highlandhomes.org/blog/blog-detail/home-buying-101-what-is-a-cdd-1019
https://www.cfmcdd.org/questions/#:~:text=A%20Community%20Development%20District%20(CDD,specific%20needs%20of%20its%20community.
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CDD fee in Orlando, Florida—Everything You Need to Know About
If you are considering buying a home in Orlando, Florida, you must know what CDD is,
its fee, and how it differs from HOA. Read on to find out!
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in Florida, home buyers in Orlando, buying a home in Orlando,
