The Improvement Bond Act of 1915 passed in California more than a century ago, but its effects still resonate for many state homeowners. The legislation permitted the levy of “special assessments,” which eventually led to Mello Roos taxes. Proposition 13, which passed in 1978, severely limited a municipality’s ability to raise property taxes for public projects, and Mello Roos was the answer.
Mello Roos Tax Rate
Mello Roos allows California municipalities to finance large projects through this tax. In addition to municipalities, counties and school districts may use funds from Mello Roos taxes to fund projects such as schools, roads, libraries and other public services. Also known as Community Facilities District, the legislation was sponsored by two legislators who gave their names to this form of financing back in 1982. The Mello Roos tax is included in your general property tax bill, usually as a special item. Some districts may send you a separate tax bill just for a Mello Roos project. The bond that a Community Facilities District issues is a lien, and if a homeowner does not pay the tax, they may face foreclosure very quickly, since failure to pay this particular tax triggers an accelerated foreclosure.
Unfortunately, determining your Mello Roos tax rate is not a cut-and-dried situation. First, find the parcel number on your property tax bill. Look on your county’s website for “Mello Roos and Special Assessments for the Fiscal Year.” Based on your parcel number, you can find information about each specific Community Facilities District and its bonds, including the maturity date, the services provided and the maximum increases you may expect in the tax, which is usually 2 percent per year. The good news is that each bond is eventually paid off and you are no longer taxed.
Mello Roos Calculator
Calculate your Mello Roos tax by looking at your current property tax bill. See what you are paying in Mello Roos tax, and then divide that amount by your property’s value. The result is the percentage of your home’s value as per what you are paying in Mello Roos tax, and it is usually less than 2 percent.
Mello Roos and The Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act, signed into law on Dec. 22, 2017, imposes a cap on state and local tax deductions. The limit is now $10,000, and will primarily affect homeowners in high tax states such as California. However, the new tax law does not affect Mello Roos specifically, as this tax was generally not deductible on federal income tax returns.
- Mello-Roos taxes rarely exceed 1.5 percent of a home's total value. They also cannot increase by more than 2 percent per year.
- Some counties will give you a detailed property tax bill online that breaks out the Mello-Roos taxes, while others, like Sacramento and Los Angeles, will require you to call for detailed information.