HOA special assessment and payoff

[dragonwalker]

I'm looking at purchasing a condo now and the base HOA is $417/month plus an additional $75 special assessment for some work done a few years ago in the complex. I do have an option of paying this loan off for about $7700 or I can continue paying for about 10 more years. The loan has about a 5% interest rate. Ofcourse I hate the idea of paying interest and have been fortunate I never have in my life yet but I'm not sure if it's the best idea to pay this off.

To begin with it's less than what I would expect to get in the market so in theory it would be better not to use my money to pay it off. The other concern is if decide to sell the property within 10 years I'd be overpaying in some sense. However I'm not sure if on the flip side if I do sell the fact this $75 assessment is no longer being paid and it would be a "lower" overall HOA that it would be a better selling point??

Also, if I paid this off could there be some kind of tax benefit I could get? Even as I pay off monthly could I write some portion of this off? I am planning on renting 1 room in this 2bedroom, 2 bath unit so not sure if that makes a difference. 

[EricEng]

This is common in The Villages in Florida.  Home's come with a 30 year bond they owe.  At 5% if you were planning to hold it you could maybe come out a bit ahead by paying it.

If you plan on selling it, don't pay it off.  When people are browsing homes to buy they don't read/trust fine print saying HOA costs are lower, they just see you wanting a few thousand more $ compared to your neighbor.

[Dicey]

I agree with EricEng.

I'd look into the WHY of the assessment. If they ran short of ca$h and needed an assessment once, there's no guarantee you won't get hit with another one. I'd check their Reserve Study documents very carefully. In fact, I'd pay a CPA to review all the financials before closing. Absolutely worth the money.

Speaking completely under the cloak of anonymity, I'd think long and hard before declaring the income from a roommate. You're going to open up a can of worms. You'll need to take depreciation, and pay it back when you sell. "Oh, you didn't take it?", the IRS inquires politely? "Too bad, we can still tax you as if you did." And they will.

From a mustachian POV, if you *need* a roommate to afford this place, you can't afford it.

Oh, and one more tip. Run those HOA dues through an inflation calculator so you're not shocked at what they become over five, ten or more years.