When California Proposition 13 passed in 1978, it restricted the ability of local governments to raise property taxes by more than an inflation factor, this is where we can show you what is mello-roos tax and how it works. The budget for services and for the construction of public facilities therefore could not continue unabated. As a result, new ways to fund public improvements in respective locales were considered that created Mello Roos. The name Mello-Roos comes from its co-authors, Senator Henry Mello (of the Monterey area) and Assemblyman Mike Roos (of Los Angeles). The Act enabled “Community Facilities Districts” (CFDs) to be established by local government agencies as a means of obtaining community funding.
A California Mello-Roos District is an area where a special property tax on real estate, in addition to the normal property tax, is imposed on those real property owners within a Community Facilities District. These districts seek public financing through the sale of bonds for the purpose of financing public improvements and services. These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax paid is used to make the payments of principal and interest on the bonds. Many have it in the form of two bonds.
Many South Orange County communities requiring new schools and infrastructures such as public parks and roads impose Mello-Roos. While property tax is assessed as a percentage of the value of the home, Mello-Roos is independent and could rise or lower and is not subject to Proposition 13.Mello-Roos is deductible in some cases but not in others.
Many Orange County communities requiring new schools and infrastructures such as public parks and roads impose Mello-Roos. While property tax is assessed as a percentage of the value of the home, Mello-Roos is independent and could rise or lower and is not subject to Proposition 13.
Some of the Orange County cities under Mello-Roos are Aliso Viejo, Newport Coast, San Joaquin Hills, Irvine newer constructed communities, Talega and The Reserve North in San Clemente, Rancho Santa Margarita, Portola Hills and Foothill Ranch areas of Lake Forest Also many of the cities with newer construction in San Diego County have Mello-Roos such as Carlsbad, San Marcos, Carmel Valley, Oceanside to name a few.
Once our home buyer identifies a home they may be interested in having us write an offer for them, we provide a phone number and information the home buyer can verify the current cost of the Mello-Roos bonds. It can go up approx one percent a year. The ceiling on when the bond ends vary house to house. Some years the bond will not be used in it’s entirety, so the buyer may pay less one year than another.
Some home buyers do not mind paying Mello-Roos to have a new community to reside in, but other buyers prefer to take the extra money they would pay out in Mello-Roos and apply to a loan amount and buy a little more expensive priced home. You need to verify with your tax consultant if you can write off the Mello-Roos portion of the taxes on your overall property tax bill.