Why is it important to know about Mello Roos taxes? If your home was built after 1982, they affect how much you pay each month on your mortgage.
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Mello Roos taxes are a topic that every home buyer should be aware of when looking for a property. Mello Roos taxes are a result of the after effects of Proposition 13 being passed in 1978. Because of this proposition, local governments were restricted in the funds they received for property tax increases.
Therefore, in 1982, in order to find another source of funding, California passed the Community Facilities Act, which enabled local governments to impose Mello Roos taxes, typically on new developments.
Mello Roos taxes are “parcel taxes.” Each parcel of property (or lot) is required to pay their portion annually, and the Mello Roos taxes are determined by the original purchase price of the property.
The original agreement was between property developers and the local government, but the developers passed that tax on to the home buyer and each successive buyer after that until it has been paid in full. Typically, Mello Roos taxes take 20 to 30 years to pay off and because they are a parcel tax, it’s important to know that they are paid in addition to your regular property taxes; they are not part of them.
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Mello Roos taxes are parcel taxes.
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When you’re looking for a property, if you are trying to find out whether you do in fact have to pay Mello Roos taxes, listen to this. Mello Roos taxes can be referred to as “CDFs,” “other fees,” or “total fees.” Sometimes they are part of your HOA fees too, so it’s important to know how much your HOA fees are and how much the Mello Roos taxes are.
Your Mello Roos taxes will ultimately affect how much you can afford to pay for a property. Calculate any potential Mello Roos taxes to make sure you can afford them. Don’t make an offer on a property without considering what potential Mello Roos taxes could do to your payment.
If you have any questions for us, don’t hesitate to give us a call or send us an email. We look forward to hearing from you.
