Cal. Senate legislative analysis of Mello Roos deductibility
“Because the IRS has not challenged the deductibility of Mello-Roos taxes, the prevailing view is that Mello-Roos taxes are deductible. However, if the IRS were requested to issue a letter ruling on this issue, observers speculate that the ruling would prohibit the deductibility of Mello-Roos taxes on income tax returns.”
“Some observers maintain that the question of tax deductibility depends on the nature of the project being financed. They claim that if the taxes are being used to finance a facility or project that benefits the general welfare and is more regional in nature, generally the taxes are deductible.”
Bottom line . . . everyone is doing it under the guise of “well it might be deductible, there’s no clear law, its going to same me a pile of cash, and I can always claim ‘gee I didn’t know'” Gotta love government efficiency and fairness in looking out of the little guy.
