I will try to help. Forgive my answers if they are vague…
First I am going to lump 1 and 2 into the same answer…Here are the questions:
1. Do Mello Roos (MR) fees actually go down the longer you live in a community?
2. What could cause Mello Roos fees to go up (would the inability to build out/sell out in a community such as 4s ranch cause a spike in fees)?
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Recall – MR provides local government an additional financing tool for infrastructure development. A Mello-Roos district is an area where a special tax is imposed on real property owners within a Community Facilities District. The Community Facilities Districe has chosen to seek public financing through the sale of bonds for the purpose of infrastructure development. The tax you pay is used to make the payments of principal and interest on the bonds.
So first off, there is no limit on the MR taxes. Unlike prop 13, which does provide a limit based on the value of the property, NR taxes are generally equally and uniformly applied to all properties in the district.
So how long does MR stay in effect? The tax stays in effect as long as it is needed to pay the expenses of the services OR until the principal and interest on the bonds are paid off along with ANY reasonable administrative costs incurred in collecting the MR tax…the maximum time for MR is 40 years…
My point is… don’t count on them going away or going down. The point is that they need to cover the services for which they were set for and those services in some cases may be on going and can include police protection, fire protection, ambulance and paramedic services, recreation program services, library services, the operation and maintenance of parks, parkways and open space, museums, cultural facilities, flood and storm protection, and services for the removal of any threatening hazardous substance. Facilities which may be financed under the Act include: Property with an estimated useful life of five years or longer, parks, recreation facilities, parkway facilities, open-space facilities, elementary and secondary school sites and structures, libraries, child care facilities, natural gas pipeline facilities, telephone lines, facilities to transmit and distribute electrical energy, cable television lines, and others… Aye caramba!!!
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What would cost more over 30 years–the MR fees one pays on a 600k home or purchasing a home that is 70-80k more in a community w/o MR fees? This maybe basic math, but are there other things I’m not considering besides the type of loan and the rate one gets on the loan?
Well not accounting for inflation… Lets say your MR was 1%…okay I will be nice… say .8% on 600k. So that is 4800 bones yeah? okay so 30 * 4800 is what 144k? So that also assumes they do not go up or down and probably does not answer your question about whether it is worth it to buy a home that is 70-80k more. Like you said, lots of angles to consider given your financing, inflation, etc…Sit down with your realtor and run all the numbers.
Can one write off MR fees?
Well ask your accountant. Technically the answer is no if it is a primary owned home. However I would bet 95% of all homeowners that pay MR and live in the home write them off…PLEASE NOTE I AM NOT ADVISING YOU IN ANY WAY SHAPE OR FORM ABOUT DECLARING MR OR NOT.
Also I just regurgitated all the MR stuff above by looking on line for a few minutes…
