Mello-Roos is a special tax charged to properties inside a Community Facilities District, which pays for infrastructure and services in newer developments. In Temecula and Murrieta it appears as a separate line on the property tax bill, varies from tract to tract, usually runs for a set term, and adds to a home’s yearly ownership cost.
How does Mello-Roos work?
A local agency, such as a city, school district or water district, forms a Community Facilities District (CFD) over a defined area, usually when land is being developed. The district sells bonds to pay for public improvements, and the owners of property inside the district repay those bonds through an annual special tax.
The name comes from the California law that created the tool, the Mello-Roos Community Facilities Act. Typical uses include roads, sewer and water lines, storm drains, parks, schools, and in some districts ongoing services such as maintenance or public safety.
How is it different from regular property tax?
The base property tax is tied to assessed value, while Mello-Roos is a separate special tax set by a formula adopted for each district. California’s Proposition 13 generally limits the base property tax rate to 1% of assessed value, with annual assessed-value increases capped at 2% until a change of ownership. Mello-Roos is charged in addition to that.
The special tax is commonly based on factors such as home size or lot size rather than market value, and some districts allow it to rise by a set amount each year. It is also separate from HOA dues, which are paid to a private association.
Which homes in Temecula and Murrieta have Mello-Roos?
It depends on the tract, not the city. In general, neighborhoods built from the late 1980s onward are more likely to be in a CFD, and many older neighborhoods have none. A single home can be in more than one district, for example one for schools and one for other facilities.
Two similar homes a few streets apart can have very different special taxes, so never assume. This is one of the main cost differences buyers find when comparing neighborhoods in Temecula, Murrieta and Menifee.
How do I find out what a specific home pays?
Look at the current property tax bill for that parcel. Here is where to check:
- The tax bill: the Riverside County Treasurer-Tax Collector lists each special tax and assessment as its own line item, with the agency name and amount.
- Seller disclosures: California sellers provide a notice of special tax for property in a CFD, often as part of the natural hazard and tax disclosure report.
- The district administrator: the agency or its consultant can tell you the remaining term, whether the tax can increase, and whether it can be paid off early.
Does Mello-Roos ever end?
Usually, yes. A special tax that repays bonds normally has a final year stated in the district documents. A tax that funds ongoing services may continue with no end date. The disclosure for the property should state which type applies and the last year it can be levied.
How does it affect what I can afford?
Lenders generally count the special tax as part of your monthly housing expense when qualifying you for a loan. A home with a high special tax can therefore reduce the loan amount you qualify for compared with a similar home without one.
Give your lender the actual tax bill for the property so the payment estimate is accurate, and ask a CPA how the special tax is treated on your income tax return.
Frequently Asked Questions
Is Mello-Roos the same as an HOA fee?
No. Mello-Roos is a tax collected with the property tax bill and paid to a public agency. HOA dues are paid to a private association for common areas and amenities, and a home can have both.
Can I pay off Mello-Roos early?
Some districts allow an owner to prepay the bond portion of the special tax and some do not. Contact the district administrator named on the tax bill to ask whether prepayment is available and how the payoff is calculated.
Does the Mello-Roos tax transfer to the buyer when a home sells?
Yes. The special tax is attached to the property, not the owner, so the buyer takes over the remaining payments. The current year is normally prorated between buyer and seller in escrow.
What happens if Mello-Roos is not paid?
It is billed with property taxes, and unpaid amounts become delinquent like other property taxes with penalties added. Because the tax is secured by a lien on the property, the district can pursue foreclosure for continued nonpayment.
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Aimee Ghafouri is a real estate agent based in Temecula who grew up in Murrieta and works with buyers, sellers and investors across the Temecula Valley and southwest Riverside County.
Aimee Ghafouri, 951 Properties, CAL DRE #02193341. This page is general information, not legal, tax or financial advice. Equal Housing Opportunity.
