Friday, June 19, 2009

What Are Mellow-Roos Property Taxes?

By Valerie Faltas

Proposition 13 was passed in 1978 by the Howard Jarvis Administration to limit propety taxes in the state of California. Proposition 13 severely controlled the ability of government to use property taxes to build public facilities and services. As a result, Californians had to find new ways to finance government community improvements in their communities like roads, schools, parks, etc. The Mello-Roos Community Facilities Act of 1982 was enacted by the California legislature, the Act created Community Facilities Districts (CFD's) to be put into place as a way of obtaining this crucial neighborhood financing.

The quantity of Mellow-Roos Property Taxes is different from one CFD to another. Normally, an adopted method that pertains to the size of the house (square footage or lot size) is utilized to establish the amount of an individual assessment. Generally, the special property taxes and assessments do not go above 1% to 1.5% of the market value of new homes. Also, the complete amount of all annual property taxes usually does not exceed 2% to 2.5% of the house's taxable property base value. So if you can to lower your taxable base value or in other words, your propety taxes you will save a significant amount of money if you have Mellow-Roos Taxes on your home since of the increased percentage in property taxes you pay.

In California thousands of homeowners in many urban areas have lost in excess of $200,000 in market value on their houses and paying 1.25% in property taxes they will save at least $2,500 per year for every year they keep their home! Yet, that same homeowner at a 2% property tax rate based on of Mellow-Roos taxes will save over $4,000 every year in property taxes! If you are paying Mellow-Roos and have lost $200,000 since you bought your house and let's say you plan to own your residence for the next 10 years, you will save $40,000! Don't settle for Proposition 8 the temporary decline in property taxes, its only temporary. 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 applicable to recently built neighborhoods such as sizable Planned Unit Developments (PUD) where there have been numerous houses built at once and the taxes are necessary to establish city services. Ive seen Planned Unit Developments that had upwards of 4,000 houses built! So, the county and city municipalities need to find funding to establish the roads, sewage systems, schools, recreation centers, parks and so much more. Prior to acquiring a property with Mellow-Roos property taxes you will be notified in the beginning negotiation stages of acquiring 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 notified before purchasing.

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:

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