HAVE YOU EVER WONDERED WHAT A MELLO_ROOS IS?
One thing new home buyers are often confronted with is a “Mello-Roos” tax. Though it comes up a lot, not everyone is exactly sure what the “Mello-Roos” is other than another tax to pay. So for those who aren’t sure, here’s a brief explanation.
Mello-Roos is simply a special tax assessed to homeowners in a community as repayment for bonds used to fund the infrastructure within their community. To homebuyers a Mello -Roos is not a desirable thing as it signifies an extra charge which will make monthly payments for a home significantly higher than a home without a Mello-Roos. But is it fair tax? What exactly does a homebuyer get for the money? Here are some of the things that a Mello-Roos may be used to pay for.
New schools, parks, recreation centers, etc. can be built using the funds raised through Mello-Roos income. More housing inventory will be created when undeveloped locations are built up. Generally speaking, low crime rates and highly desirable new schools are common in Mello-Roos communities. But there are also some negative points worth mentioning to homebuyers.
Cost of housing may be increased because of the tax, possibly limiting the amount of prospective buyers when it comes time for resale. Maintenance of the improvements could be more costly than anticipated.
There are also a couple of questions that are high on the list for those looking for a house.
How long does a Mello-Roos last? The length of the Mello-Roos tax varies from subdivision to subdivision. Fifteen years from the original build date is about average. The payment very rarely extends beyond 30 years or is shorter than 7 years.
How much does a Mello-Roos typically cost? Depending on the year of construction, it can range anywhere from $25 to over $300 per month; the actual tax is usually collected annually or semi-annually.
That’s basically what you need to know about Mello-Roos.