Property Tax Bills are here!
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someguy
Active member
My supplemental assessment took so long to process that I am paying 2 years of ad valorem tax and of course 1 year of mello roos in the next 5 months. It sucks to watch that cash go out. Yes I know, I got to keep that in my pocket for an extra year and earn a whopping 1% pre tax rate of return, but still sucks to send off so much money in a short period of time... Anyway...
Speaking of MR, does anyone have the table that shows how the MR is calculated? Specifically,
19 15 AD Bond PE
Irvine USD CFD 09-1
Irvine USD CFD 86-1
Just want to verify the county's calculation since it's the first full bill I've received.
Speaking of MR, does anyone have the table that shows how the MR is calculated? Specifically,
19 15 AD Bond PE
Irvine USD CFD 09-1
Irvine USD CFD 86-1
Just want to verify the county's calculation since it's the first full bill I've received.
someguy
Active member
Changer said:Has any homeowner attempted to deduct Mello Roos tax as a federal income tax deduction? If so, what was the outcome? Just asking for a friend.
Step 1) claim mello roos as a property tax deduction on your federal and state tax returns.
Step 2) be selected for a 1 in 100 prize of an IRS or FTB audit
Step 3) ???
Step 4) Tell us how the audit went
People argue about whether or not mello roos is deductible.
The FTB has said "we'll get back to you" and hasn't really gotten back to us https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction
The most recent info I could find from the FTB was from a 2013 analysis of an amended bill that seem to suggest they will allow it as a deduction and makes "no recommendation", but I don't know if that bill passed https://www.ftb.ca.gov/Archive/Law/legis/13_14bills/AB893_031413.pdf
Then there's the IRS. They discuss it in a 2012 letter here https://www.irs.gov/pub/irs-wd/12-0018.pdf
The interesting part is "Assessments on real
property owners, based other than on the assessed value of the property, may be
deductible if they are levied for the general public welfare by a proper taxing authority at
a like rate on owners of all properties in the taxing authority?s jurisdiction, and if the
assessments are not for local benefits (unless for maintenance or interest charges)."
So to deduct it must be
levied by a proper taxing authority (Yes, mello roos is attached to properties by the county)
for the general public welfare (debatable. mello roos proceeds goes to fund infrastructure, schools, police, and fire services within the district to which the bond is attached. seems a bit local in deployment, but one might argue good local school/police/fire/infrastructure is beneficial to citizens/business/governments beyond the local region)
at a like rate on owners of all properties in the taxing authority's jurisdiction (sorta. mello roos is assessed based on lot size and dwelling type. it's a like rate for properties within each size and dwelling type. but individual districts vary in mello roos and individually they do not comprise all properties in the taxing authority's jurisdiction)
and if the assessments are not for local benefits (again, debatable on what exactly defines local benefit and if the benefits mello roos provides is limited to local scope)
unless for maintenance or interest charges (this is rare. great park has some part of the mello roos that goes towards maintenance. It's also a challenge to determine what part of the mello roos payment in the current tax year went towards interest. One could probably estimate it)
Then there's the spirit of the deduction. Look, the state/county/city needs tax revenue. They get it through all kinds of taxes, one of which is taxes on real property, which is a deduction as paid. Real property tax revenue is needed to support school/police/fire/infrastructure. Those are essential services that have serious problems if they are not continuously well funded AND expanded as the population grows.
How about that well funded part? If property values drop, property tax revenue drops. That sucks for those essential services. They are certainly going to suffer and there will be long term negative consequences for under funded schools/police/fire/infrastructure. Property values are not equal. That sucks for services within the low/depressed property value areas. It also sucks (well for some people/governments) when your state passes prop 13 which limits the rise of taxable value on houses to 2% per year, meanwhile other costs/expenditures rise much faster than that. Fast forward a few decades and you've got a real imbalance.
How about expanding with population growth? Preparing new land, building schools, building fire stations, parks, adding police equipment/buildings requires a lot of up front capital. Often times city/county/state funds are simply not available to pay those huge up front costs. Even though our many divisions of government are really good at running deficits, sometimes they have trouble laying out large amounts of capital (i.e. maybe they've sold so much debt that potential future debt buyers are getting skeptical/demanding higher interest rates... maybe they can't agree on a budget... maybe they have trouble passing much needed legislation to fund expanding services... Whatever the reason, the government is unable to fund new infrastructure/services to support new housing with existing property taxes). But gosh we keep growing, demanding more housing units, and the developers are only interested in that sweet profit from building new houses.
So... let's see... we need steady tax revenue... we need up front funds... we need to assure bond holders... OH I GOT IT! Let's sell a bond, repay it with fixed payment tax revenue (or increasing up to 2% per year, wink wink GP), and secure it with real properties! Let's call it MELLO ROOS! That will get around prop 13, it will keep tax revenues steady, and it will help the state raise enough capital via bond issuance to make large capital expenditures to serve the citizens of additional housing developments!
Mello Roos is a solution to California's problem of raising property tax revenue to fund supporting infrastructure/services for new housing developments. It's all going into the government pot. It's being levied on real properties. It's paying for the essential services the government needs to provide. That looks and smells like a real property tax helping out the entire government and their constituents.
/gets off soapbox