6 Things You Should Know About Mello Roos in Carlsbad Real Estate

By
Real Estate Agent with Solutions Real Estate CalBRE License #01490977

6 Things You Should Know About Mello Roos in

Carlsbad Real Estate

 

There are 6 things you, the buyer, should know about Mello Roos.

 

Mello Roos are a type of property tax and can cost big bucksFirst, let’s talk about what Mello Roos are, for those who are not familiar with real estate in California where these taxes exist. I know I didn’t have a clue when I was doing my home search for Carlsbad from my former home in Boston.

 

Mello Roos are named after the creators, Senator Henry Mello and Assemblyman Michael Roos, of the 1982 bill that was passed to allow local governments and builders to form Community Facility Districts where new subdivisions are/can be built.

 

Tax-exempt bonds are sold in these CFDs to fund the cost of public improvements, which can be roads, schools and a host of other things, and repayment of these bonds (which can be over 20 years or more) is the responsibility of the residents in the form of Mello Roos.

 

Mello Roos are, thus, a type of community financing and a property tax.

 

  1. Mello Roos are found in new housing communities built since 1982 and are different from California state property taxes and HOA fees.
  2. Mello Roos may have tax consequences – consult your CPA to determine how to handle Mello Roos taxes
  3. Mello Roos can run from several hundred dollars to over $5,000 per year depending on the community, the cost of house, and other factors, and the amount can vary from house to house within the subdivision
  4. Some new home builders in my area of Carlsbad are paying down a portion of the Mello Roos, especially in the early phases of a development, but this is the exception
  5. You will typically hear the total of Mello Roos and property taxes quoted as a percentage of the purchase price, say 1.35%, in new home communities (some areas of San Diego County they are as high as 1.9%).
  6. It is possible that a paydown of the Mello Roos could be negotiated as part of an offer package with a willing seller depending on the payoff amount owed, the specifics of the offer including cash down, and other factors. But it financially may not make sense for the seller to do this and from what I have heard it's very rare.

 

When looking for a home, be sure to watch for these expenses since they can be substantial and must be factored into your loan approval, as well as your personal budget.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Location:
California San Diego County Carlsbad
Groups:
1st Time Buyers
CALIFORNIA REAL ESTATE
Local Expert
Advice for Buyers
Tags:
buyers
taxes
mello roos
jeff dowler crs
southern california relocation dude
property taxes in carlsbad
what are mello roos fees

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
1,267,591
Edward & Celia Maddox
Century 21 Arizona Foothills - Gilbert, AZ
EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD

Good article.  We remember paying these taxes when we lived in California.

Dec 29, 2011 01:38 AM #1
Rainmaker
563,523
Steve, Joel & Steve A. Chain
Chain Real Estate Investments & Mortgage, Steve & Joel Chain - Cottonwood, CA

Jeff,

Great Mello Roos summary; Funding infrastructure development can be a challenge. We have one of these districts being formed and placed on voting ballot. SC

Dec 29, 2011 01:43 AM #2
Ambassador
3,075,981
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Edward and Celia - I've had buyers who refuse to look at homes where there are Mello Roos, and in some areas that can be a challenge.

Steve - well I can certainly see the value but the costs can get pretty steep. Something buyers need to watch

Jeff

Dec 29, 2011 01:48 AM #3
Rainmaker
2,360,549
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Thanks for the info on your area....and, I am sure the metrics for the blog will be even better with the 6 things....

Dec 29, 2011 02:40 AM #4
Rainmaker
272,519
Ellie Penaranda
239.776.5077 Downing-Frye Realty - Naples, FL
Naples Florida Real Estate - Waterfront & Beach Co

Great information for buyers out there Jeff.  I am sure it plays a role in the decision making stage for a buyer comparing homes.  We have our CDD (Community Development District) taxes and it does vary from one community to another.  Wish it was a matter of just finding our buyers a home they can fall in love with -  but amenities and taxes can be a source of disappointment if not addressed upfront with clients.

Dec 29, 2011 03:32 AM #5
Ambassador
3,075,981
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

Kristin - hope so. Thanks for stopping by!

Ellie - that is so true. There are so many issues to consider, especially budget

Jeff

Dec 29, 2011 04:35 AM #6
Ambassador
302,140
Linda K. Mayer
License # 01767321 - La Verne, CA
Realtor, SRES, SoCAL, A REALTOR YOU CAN TRUST

Jeff, I learned something new; I never knew how they came into being.  Fantastic information and great ideas to paydown the fee.  Something I never thought of before.

Dec 29, 2011 10:06 AM #7
Ambassador
421,752
Rich Cederberg
eXp Realty - Albuquerque, NM
eXp Realty Agent Albuquerque

It is definitely good to be educated home buyers.  So many people don't consider all the extras when budgeting for their new home.  Great post Jeff.

Dec 29, 2011 12:29 PM #8
Rainmaker
1,327,814
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL
REALTOR

Jeff - I never ever heard of Mello Roos, great info for buyers especially those who are relocating to CA.

Dec 29, 2011 01:31 PM #9
Ambassador
3,067,204
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Jeff that is not the kind of surprise that you want at the end of a transaction.  Glad we do not have anything like that around here.

Dec 29, 2011 03:14 PM #10
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Ambassador
3,075,981

Jeff Dowler

The Southern California Relocation Dude - Carlsbad
What's my Carlsbad CA Area Home Worth??
*
*
*
*
Spam prevention

Additional Information