Case in point, a new listing of mine. One of the highest M-R taxes I've ever seen. A stunning home, former model, with every upgrade imaginable! And, without the M-R it would be listed 100-150,000 more than we currently have it priced.
So, why some homes and not others carry that tax burden? I'm not a tax analyst nor a home builder. It technically says it is for homes built in communities that need additional funds for infrastructure. As in schools, roads, parks, etc. And, quite honestly, it can be voted into an older community as well. So, we can't always escape it.
Now, let's go back to the math. And, let's think about tax credits. Again, I'm not your tax man.
Math is this ~
House price 550,000
Use 4.5% interest rate and 20% down payment
Get approximately a monthly payment of 3500 for your PITIA
(PITIA = Principal Interest Taxes Insurance Association)
Take that exact same house with no Mello-Roos
Using the same 4.5 + 20% down to get that 3500 PITIA?
House price goes up to 675,000
Tax Thoughts ~
Boy oh boy, that's a tough one. All interest on your home loan is tax deductible. Well, to a certain point. For this example, yes it is.
Property taxes are tax deductible too, right? Yes indeedy.
Mello-Roos as well you ask? And, a multitude of different answers you shall receive! Check Wikipedia, check IRS, check Franchise Tax Board, check with your Tax person.....all different answers and it would appear all pretty much the way you consider the tax to be utilized is if it is a tax deduction or not.
If it is deductible, then who quite honestly cares how high the mello-roos is if you love the home? Well, your lender for certain! Your own conscience has to wrestle it as well.
Well, at least M-R generally does have an end date that is usually shorter than your 30 year mortgage!
For further questions, just holler. OR ASK YOUR TAX PERSON!