The passage in 1978 of Proposition 13 restricted local governments ability to pay for capital facilities and services by increasing property taxes. In 1982, Senator Henry Mello and Assemblyman Mike Roos enacted the Community Facilities District (now called Mello-Roos) to provide local governments with an additional way to raise needed funds. Below are common questions and answers regarding Mello-Roos…

How much is Mello-Roos for Aliso Viejo Real Estate? It can vary from about $400 per year on up to about $2,500 per year dependent upon the community and the lot. A few home communities in Aliso Viejo have no Mello-Roos at all.

How do I estimate the Mello-Roos when buying a Home? During the Escrow process, the Seller will deliver a disclosure which will state in writing the exact amount of the Mello-Roos fee. You can also estimate the Mello-Roos prior to making an offer on a home. You take the quoted Tax Assessor yearly Tax amount, and subtract the Prop 13 portion of the tax from this amount. The Prop 13 Tax can be estimated by multiplying 1.15% times the previous sale price stated in the tax rolls. The remainder is a reasonable estimate of your yearly Mello-Roos payment.

How is the Mello-Roos Tax paid? The Mello-Roos is included in your normal tax bill which is billed to you twice per year.

Does the Mello-Roos tax go up when I sell my Home? No, unlike the Prop 13 portion of your property tax, the Mello-Roos portion of your property tax does not change when you sell your Aliso Viejo home. The MelloRoos tax can increase dependent upon the community facilities agreement by about 1% to 2% per year, but it does not have anything to do with the sale price of your home.

Can I deduct Mello-Roos payments from my Income Tax? Most Tax accountants are of the opinion that the Mello-Roos tax is not legitimate income tax deduction. Please consult with your Tax Advisor for final determination.

How long does the Mello-Roos tax stay in effect on my Home? Typically, the Mello-Roos assessment is written for about 15 to 25 years dependent on the community facilities district. Although, many of the districts have the right to renew the Mello-Roos tax if needed.

How do I compare the value of a Home with Mello-Roos against a Home without? Prior to making a decision to buy a home, here is a simple way to compare the total monthly cost of the home with Mello-Roos versus a home with no Mello-Roos. Say you are considering buying either a home in Aliso Viejo with yearly Mello-Roos payment of about $1,200, or possibly buying a home in say Mission Viejo with no Mello-Roos. To compare the prices of these homes, I take that $1,200 yearly Mell-Roos payment, divide by 12 for the monthly payment of $100. A $100 per month payment is approximately equal to a $20,000 mortgage in today’s interest rates. Therefore the home in Aliso Viejo is actually costing you about $20,000 more as compared to the home you’re considering in Mission Viejo. If the home in Aliso Viejo is still a bit more desirable at a comparative price $20,000 higher than the home in Mission Viejo, then buy it, if not, buy the home in Mission Viejo.

If you would like to view all homes listed for sale in the Aliso Viejo MLS, please visit our website: Aliso Viejo Real Estate

Aliso Viejo Mello Roos Tax Q & A is a post from: Orange County Real Estate Blog