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If you’re thinking about buying property in Texas, particularly in the greater Houston area and other large metropolitan areas, sooner or later you’ll hear the word MUD. A MUD (Municipal Utility District) is a special governmental entity created by the State of Texas whose main functions are to provide water and wastewater services and to maintain drainage facilities within its boundaries. A MUD may levy and collect taxes, issue bonds, charge for services, condemn property, enforce restrictive covenants and make regulations to accomplish its purposes. MUDs come in a variety of names – MUD, WCID (Water Control & Improvement District), WSD (Water Supply District), PUD (Public Utility District), etc. The list of acronyms is almost endless!
MUDs were created to allow unincorporated areas the financial and legal wherewithal to provide services to commercial and residential customers when comparable services are not readily available (or financially feasible) through municipal providers like the City of Houston. In the greater Harris/Montgomery Counties area, there are more than 600 MUDs, most of which provide services to one or two subdivisions/residential developments and the commercial properties adjacent to those developments.
As a Texas real estate owner, your local MUD will affect your life in two ways: first, you’ll get a bill from your MUD each month for your water and wastewater treatment services; drainage control services; and in parts of Harris County an additional monthly surcharge from a Regional Water Authority charged with implementing the Surface Water Conversion Program mandated by the Texas Legislature; and second, you’ll receive a property tax bill from your MUD each year to pay for its bonded indebtedness and general maintenance and operating expenses. (Note: the monthly surcharge from your Regional Water Authority can be – and often is – the largest fee on your monthly water bill!)
Since your biggest tax burden in Texas comes in the form of property taxes (also called Ad Valorem taxes), your MUD tax rate can be a major or minor component of your overall property-tax burden. MUD tax rates can range from zero to $1.50 (or more) per $100 of your property’s assessed value. An average MUD tax rate is probably in the $0.50 to $0.75 range. Putting it into real dollars – if your MUD tax is $0.75 (75 cents) and your property’s assessed value is $150,000, then your annual MUD tax burden (before allowances for Homestead, Over-65 and/or other exemptions) would be $1,125. You’ll have to check with each MUD as to what (if any) exemptions they allow.
As onerous as some of this may sound, just remember – if you live in an area where water and sanitation services are provided by the city, your monthly and annual burden for these services can and probably will be even more expensive!
Learn more about Texas Property Taxes
Would you like more information or help with your Harris County TX Relocation and finding Homes for Sale? Or if you’d like to get a more precise estimate of the total estimated tax burden on any property in this area, just give me a call (713-828-6291) or send me an e-mail (firstname.lastname@example.org). Be sure to include the property address.