Home Buying in Santa Clarita>Question Details

Maria Zia, Renter in Northridge, CA

I am lost because never heard of Mello ross tax before and now I am between deciding to purchase a home with mello ross tax or without it...

Asked by Maria Zia, Northridge, CA Thu Jun 13, 2013

The house with mello ross tax i can lock the price now, but the one without it I can't lock the price and the market is crazy right now...both homes are brand new...help

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7
Mello Roos taxes actually have nothing to do with the builder. Builders pay a development fee to the city or county where they build, but Mello Roos taxes are paid by the homeowners directly to the County as an add-on to the property tax bill.
See the link below to my blog post if you want more detail on the subject. Mello Roos taxes where created by the California legislature in 1982 as the "Community Facilities District Act" as a way to collect more tax revenue from home owners since Prop 13 had put a restriction on runaway property taxes.
The dirty little secret about Mello Roos is that even though the tax is supposed to end on a specific date when a municipal construction project is finished, they can go on forever. Here's an example. A new subdivision is built on the outskirts of town. To serve the new residents of the subdivision, the police department builds a local station and a Mello Roos tax is assessed on all the properties in the subdivision to pay for it. The tax is added as a line item on the semi-annual property tax bill. The plan is to terminate the Mello Roos tax when the station is paid for. But WAIT! There's MORE! Politicians know they can't raise property taxes very much and raising the sales tax within city limits is always unpopular, so they build recurring operating costs for the new building into the Mello Roos funding. Instead of Mello Roos taxes going away as planned, they actually continue for as long as the new police station is in operation.
My point is this - if you research the Mello Roos assessment on a property you are considering buying and see that it should be going away in the near future, don't bet on it. Tax-addicted politicians have ways to make Mello Roos that little bunny rabbit that keeps going and going and going and going....
1 vote Thank Flag Link Thu Jun 13, 2013
Good Morning Maria,

Please let me know the community you are referencing. Are you talking about the KB home tract on Plum Canyon and Shappell Homes? Mello Roos is a tax that is above the normal tax basis that the builder is passing along to you for certain community amenities. If you would like to speak further inregards to this I would be more than happy to assist you.
1 vote Thank Flag Link Thu Jun 13, 2013
The original reason for the Mello Roos Bond was to lower the price of the home and thus lowering the amout needed for a down payment. It was also a way around Proposition 13 which limited the property tax to 1% of the purchase price. Most new homes seem to have the added bond so it's take it or leave it. The main reason I don't like it is the home owner can pay up to $7,500 a year and gain no appreciation as prices rise. If a home goes up 7% the mello roos payment will not bring this appreciation. Thinking of selling or buying a home in Valencia, Stevenson Ranch or other areas of the Santa Clarita Valley? Call us!

Tony & Dani Lewis RE/MAX of Valencia 661-510-7975
Web Reference: http://www.TonyLewis.com
0 votes Thank Flag Link Sat Oct 12, 2013
Mello Roos does have to with the builder because they can choose to pay more or pass it to the buyer.
I would buy no Mello Roos because in a down market those homes are hit hardest first. It affects resale big time.
0 votes Thank Flag Link Fri Jun 14, 2013
Maria Zia,

You can give me a call to discuss mello roos in depth but briefly here is some basic information. First off mello roos is not a tax it is a bond. It came into existence when Proposition 13 passed and limited property tax to 1% per year of the purchase price. Every home has to pay the same fees that are included in a mello roos bond, however, post proposition 13 many builders needed additional funds to pay local fees. Their solution was to create a mello roos bond that would not violate proposition 13. The mello roos, also call other names, may cover local services and many in Valencia, California may be for a School Bond.

The pros for a mello roos may include somewhat less competition for these homes.
The con is the same money included in the home would gain equity.
Mello roos is paid on the property tax bill and may be paid monthly or twice a year.

Tony Lewis RE/MAX of Valencia tonyglewis@yahoo.com Cell - 661-510-7975
Web Reference: http://www.TonyLewis.com
0 votes Thank Flag Link Thu Jun 13, 2013
Mello Roos is specific to each individual tract. It is very easy to have your real estate agent run all of the tax info for each home you are considering. Mello Roos is sellable to the public when the market is hot or the location is good. Stevenson Ranch has an average of $200 per month Mello Roos but a very small HOA fee. Due to the location and school district of Stevenson Ranch, it is very sellable. Other locations are not so sellable, do your homework and do not get caught up in the emotions of the marketplace
0 votes Thank Flag Link Thu Jun 13, 2013
Hello Maria,
I would strongly recommend purchasing a home without mello roos, though very difficult to find a newer property in the Santa Clarita Valley without mello roos it is possible. If you have any questions or need some help feel free to visit my website.. http://.www.AlexLAEstates.com or contact me at (661)964-7321 or via email at AlexM@Troop.com :) Good luck!
0 votes Thank Flag Link Thu Jun 13, 2013
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