How Mello-Roos tax works in Orange County

How Mello-Roos tax works in Orange County

So you’ve spotted your dream house in Southern California and you want to get it. You’ve checked your accounts to reassure yourself that you can afford it and you have started doing your research on the area. Everything checks out; there are great schools for your kids to attend, and entertainment for yourself but one thing seems to have you confused. In addition to paying your regular property taxes you will be required to pay an additional tax known as the Mello-Roos tax? What is this you wonder?

What is Mello Roos- Tax?

The State of California found itself in a jam after Proposition 13 was passed in 1978 as the law limited the government’s ability to increase property taxes. Additionally this new law placed limits on what the government could do with the property taxes they were able to collect, prohibiting it from using these taxes to construct roads and other public facilities and services.

This forced the government to get creative and in 1982 the now famous Mello-Roos Community Facilities Act was passed presenting the government with a new way to gain community funding. Cities and Counties were then able to take out bonds which were used for community development as the Mello-Roos tax was used to cover those bonds.

What is the Mello-Roos tax used for?

Home owners in California make monthly tax payments that are used by cities and counties to repay bonds that had been taken out for infrastructural development. In many instances these taxes contribute directly to the improvement or the construction of roads and go a far way in helping to support schools and other institution that are beneficial to the entire community. So while many people are wary of paying it is in fact used for valuable cause.

How Mello-Roos tax works in Orange County

Who is affected?

All homes built after 1982 may be subject to a Mello-Roos bond. It follows that the newer the home you buy the more likely it is that you will be required to pay the Mello-Roos tax. In some areas there are homes that may have more than one bond so potential buyers must get a good understanding of this tax to ensure they know what they are getting into.

Cities in Orange County that may have Mello-Roos include but are not limited to; Aliso Viejo, Irvine, San Juan Capistrano, Dana Point, Mission Viejo and Coto De Caza.

How much is Mello-Roos in Orange County?

Many home owners in Orange County are eager to find out just how much the Mello-Roos tax is for their property and this should not be too hard to obtain. Mello-Roos tax is a flat rate that is added to your regular property taxes. While regular property taxes range between 1% – 1.5% not the assessed value of the property, there is no set formula to ascertain you Mello-Roos tax as it is not a percentage tax and is unique for each property based on age and location. With the help of an agent this information should be easy to come by.

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