If you are shopping new construction in California, you will hear about Mello Roos. Here is the plain English version.
What it is
Mello Roos comes from the Mello Roos Community Facilities Act of 1982. A city, county or district can form a Community Facilities District, or CFD, to pay for things like roads, parks, schools and water lines in a new area. Homeowners inside the district pay a special tax to cover those costs.
How you pay it
The special tax shows up on your property tax bill, on top of the base property tax. It is not the same as an HOA. Some homes have both, some have one and some have neither.
How long it lasts
Every district is different. Many run for decades and some increase a small amount each year. The exact amount, the maximum it can grow and when it ends are spelled out in a document called the Notice of Special Tax.
Why it matters for your payment
A special tax adds to your monthly cost the same way property tax does, and it counts when you qualify for a loan. Put it into the payment calculator so there are no surprises.
Questions I ask before you sign
- What is the special tax on this exact homesite this year?
- Can it increase, and by how much each year?
- When does it end?
- Are there other special assessments, such as lighting or landscaping districts?
- What is the total effective tax rate the builder is quoting?
Builders publish these numbers, but they are not always on the website. Ask me and I will get the real numbers for the home you like.
I am a real estate broker, not a tax advisor. For tax questions, talk with a CPA.
Builder pricing, available homes and incentives are subject to change at any time without notice. Square footage and features are approximate and set by the builder. Please confirm everything with me and the builder before you make a decision.