Mello-Roos and Property Taxes Lookup

When you think you've found the perfect home, in a great school district with beautiful parks, what could go wrong? Many Californians are disappointed to learn about additional taxes, such as Community Facilities District (CFD) financing, also known as Mello-Roos. These can affect your ability to afford your dream home, so it's important to understand what Mello-Roos taxes are, and in which areas of Orange County, CA you can expect to find them.

What are Mello-Roos taxes?

Mello-Roos is an additional property tax within the state of California. Most people know about the standard state property tax of 1 percent, which is calculated based on the property value and cannot increase more than 2 percent each year. In communities that have been established as CFDs, a Mello-Roos tax is applied, which varies between communities. This additional tax can add anywhere from $70-$1,300 to your monthly expenses, so it is important to factor Mello-Roos taxes into your monthly budget when buying a new home.

Why do Mello-Roos exist?

The Mello-Roos legislature was passed in 1982, which allowed local governments to sell bonds to finance community infrastructure projects and services. This was in response to the enactment of Proposition 13, where state property taxes were funded at 1 percent. California law permits the construction of schools, parks, roads, childcare facilities, police and fire stations through Mello-Roos. Therefore, many communities across the state enjoy excellent services that they may not otherwise have, since the passing of this tax.

Is my neighborhood affected?

Under Californian state law, Mello-Roos can be introduced by a city, county or school district. Often, they are introduced to leverage the costs incurred by developers and can lower the initial cost of owning a home within these communities. A common myth is that Mello-Roos are exclusive to new, upmarket communities that require brand new services, yet this is not always true. Mello-Roos CFDs can be established at any time, when two-thirds of voters within the community vote in favor of the motion. It is not unheard of to find CFDs in communities in which it is deemed necessary by voters (such as for gentrification purposes or to modernize infrastructure). Notably, whether you buy a Mello-Roos property, or it is voted in afterward, the additional taxes can last anywhere from 20-40 years from the date of commencement and are subject to the same conditions as regular property taxes.

Now you know what Mello-Roos are, you must consider the implications of buying a home in a CFD. While property prices in a CFD may be lower, you may pay more each month in taxes for the additional services. Ultimately, it matters most what you value in your home or neighborhood, and for many, Mello-Roos helps to provide excellent schools, modern local services, and a safer place to live. To lookup how much tax you will pay on your new home in Orange County, we provide all the information you need here.