What is a MUD in Texas?
If you are thinking about buying property in the Spring, The Woodlands, parts of Harris County and parts of Montgomery County area of Texas, you will soon 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, sewage, drainage, and other services 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. In the greater (unincorporated) Houston area, there are more than 600 MUDs, most of which provide services to one or two subdivisions/residential developments and the commercial properties immediately surrounding those developments.
In addition to receiving a monthly bill from your MUD each month for water and sewage, you will receive an annual property tax bill from your MUD. The annual property tax bill from the MUD is to pay for its bonded indebtedness, general maintenance, and operating expenses. MUD rates vary by MUD and they do generally decline over time as the MUD’s operating and debt service cost are shared by more homeowners. MUD property tax rates range from zero to $1.50 or more per $100 of your property’s assessed value.
A couple of last things to note … the total property tax rate that is quoted in the Spring, The Woodlands, parts of Harris County and parts of Montgomery County area of the Texas MLS includes the taxes from all taxing entities including the MUDS. Also if you are able to itemize on your Federal Income tax return make sure you include your MUD tax because it is a deductible property tax.