When Proposition 13 passed in 1978, it extremely limited the capacity of local governments to use property taxes to construct public facilities and services. Consequently, Californians were forced to find new ways to fund public facilities in their neighborhoods such as roads, schools, parks, etc. The Mello-Roos Community Facilities Act of 1982 was enacted by the California legislature, the Act enabled Community Facilities Districts (CFDs) to be established by local government agencies as a means of getting this crucial neighborhood financing.
The quantity of Mellow-Roos Property Taxes changes from one CFD to another. Typically, an approved formula that pertains to the size of the home (square footage or parcel size) is used to ascertain the quantity of an individual assessment. Often, the special property tax and assessments do not exceed 1% to 1.5% of the market value of new homes. Additionally, the total amount of all yearly property taxes usually does not exceed 2% to 2.5% of the homes taxable property base value. So if you are able to lower your taxable base value or in other words, your propety taxes you will save a substantial amount of money if you have Mellow-Roos Taxes on your house since of the increased percentage in property taxes you pay.
The average homeowner in most urban areas in California in todays real estate market has lost in excess of $200,000 in market value and at the normal rate of 1.25% in property taxes they will save $2,500 per year for every year they own their house! However, that same taxpayer at a 2% property tax rate because of Mellow-Roos taxes will save $4,000 per year in property taxes! Learning to PERMANENTLY lower your taxable base value in California is the key to saving thousands over the course of your home ownership which is disclosed in the California Little Black Book.
Generally Mellow-Roos Property Taxes are applied to recently built neighborhoods such as sizeable Planned Unit Developments (PUD) where there have been numerous homes built in a short period of time and the property taxes are needed to create city services. Ive seen Planned Unit Developments that had more than 4,000 houses built! So, the county and city governments need to find funds to build the roads, sewage systems, schools, recreation centers, parks and so much more. Prior to buying a house with Mellow-Roos property taxes you will be informed in the initial negotiation stages of purchasing the home and during escrow that these property taxes apply. You won't be blind sighted by Mellow-Roos Taxes, it is required that you are informed before buying.
About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.
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