What Is Mello-Roos? A Guide for Anaheim Hills Buyers

Are you seeing an extra line on some Anaheim Hills listings for “special tax” and wondering what it means for your payment? You are not alone. When you shop newer tracts in northern Orange County, Mello-Roos can change your monthly cost and even what you qualify for. This guide explains what Mello-Roos is, how to find the exact amount for a specific home, and how to compare properties with and without it. Let’s dive in.

What Mello-Roos is

Mello-Roos is a special tax created under the Mello-Roos Community Facilities Act of 1982. Cities, counties, or developers form Community Facilities Districts, or CFDs, to fund infrastructure or services like roads, sewers, parks, fire stations, or schools.

This special tax is separate from your regular property tax. It appears in addition to the basic property tax under Proposition 13 and any other assessments. Amounts can vary by parcel type, so two homes on the same street might not pay the same CFD tax.

How it shows on your tax bill

You will see the CFD name or number listed as a separate line item on the Orange County property tax bill. It is billed and collected through the county’s normal cycle. If your mortgage includes an escrow account, that payment typically includes the Mello-Roos amount.

The owner of record on the lien date is responsible for that year’s tax. In most sales, buyers and sellers prorate the amount at closing just like other property taxes.

How the tax amount changes

CFDs use a written set of rules called the Rate and Method of Apportionment, or RMA. Your special tax may be a fixed dollar amount, a tiered amount based on lot or home type, or may include allowed increases like a fixed percent per year or a CPI cap. Review the RMA to understand how your amount can change in the future.

How long it lasts

Mello-Roos funds bonds that pay for facilities. The tax usually lasts until the bonds are repaid. Some districts have scheduled end dates, often 20 to 40 years, while others can run longer depending on the financing. Once the bonds are paid off, the special tax typically ends.

Some buyers ask about deductibility for income tax purposes. Treatment can vary and depends on IRS rules and your situation. It is best to talk with a tax professional for guidance.

Anaheim Hills research steps

Use this step-by-step path to confirm whether a specific Anaheim Hills home has Mello-Roos and what it costs:

1. Check the MLS and seller disclosures

   • Look for fields labeled “Mello-Roos” or “special tax.” Ask the listing agent to confirm the CFD name and the current annual amount.

2. Review the current and prior year tax bills

   • The Orange County property tax bill shows the exact CFD name and annual amount. Ask the seller for copies or use the county tax portal to view the parcel’s bill.

3. Get the title company’s preliminary report

   • Title work lists recorded liens and special tax liens tied to the parcel, including CFD bonds.

4. Request official CFD documents

   • Ask for the Notice of Special Tax, the Rate and Method of Apportionment, and the Preliminary Official Statement or Official Statement for the bonds. These explain how the tax is calculated, how it can escalate, and when bonds mature.

5. Use local government resources

   • Check the Orange County Treasurer-Tax Collector for parcel lookups and CFD lists. The City of Anaheim or County of Orange finance pages often provide CFD maps and contacts. The California Debt and Investment Advisory Commission can show bond schedules.

6. Confirm details with the HOA or city

   • The HOA or management company can tell you whether the CFD is paid through the HOA or directly on the county bill. The city or the CFD administrator can confirm bond payoff timelines and future increase rules.

7. Loop in your lender early

   • Lenders include the CFD amount in qualifying. Share the exact annual figure so your preapproval reflects the true monthly obligation.

Quick cost math you can use

Turn the annual special tax into numbers you can compare.

• Monthly cost = annual Mello-Roos divided by 12.
• Cost as a percent of price = annual Mello-Roos divided by purchase price, then multiply by 100.

Example: If the annual Mello-Roos is 2,400 dollars on an 800,000 dollar home, the monthly cost is about 200 dollars and the annual burden is about 0.3 percent of the price.

Weigh it in your total budget

Include Mello-Roos when you estimate your full monthly housing cost:

• Mortgage principal and interest
• Regular property taxes
• Mello-Roos special tax
• Homeowner’s insurance and any mortgage insurance
• HOA dues and any assessments
• Utilities, maintenance, and reserves

Underwriting generally treats Mello-Roos as part of your recurring housing expense. That means it can lower the loan amount you qualify for. Give your loan officer the exact annual figure early in the process.

Compare two homes in Anaheim Hills

When one property has Mello-Roos and another does not, use the same down payment and interest rate for each estimate so you are comparing apples to apples. Build the total monthly cost for each home by adding mortgage, property tax, Mello-Roos, HOA, and insurance.

Look at the RMA for allowed increases and check bond documents for the maturity date. A longer remaining term or higher annual escalators increases long-term cost. For resale, consider how the market views similar homes with and without CFD taxes by reviewing comparable sales in and out of the district.

Negotiation can help. Some sellers provide credits to offset the special tax, although they are not required to. Paying off CFD bonds at closing may be possible in certain cases but is uncommon and can require a significant payment. Confirm feasibility with the CFD administrator and appropriate professionals before assuming it is an option.

Smart next steps

• Ask the listing agent for the current tax bill, the CFD name, and the RMA.
• Request the title prelim and official CFD documents.
• Verify the parcel on the Orange County tax portal and contact City of Anaheim finance if needed.
• Share the exact annual amount with your lender and ask how it affects your qualification.
• Speak with a tax professional about potential deductibility for your situation.

If you want one-on-one guidance while you shop Anaheim Hills, reach out to Mary Meza Hayes. You will get clear next steps, careful review of the documents, and a plan that fits your budget and timeline.

FAQs

What is Mello-Roos in Anaheim Hills?

• It is a special tax charged by a Community Facilities District to fund infrastructure or services, billed in addition to regular property taxes.

How can I tell if a home has Mello-Roos?

• Review the Orange County tax bill for a CFD line item, check MLS and disclosures, and confirm with the title prelim and CFD documents.

Can the Mello-Roos tax increase over time?

• Yes, allowed increases are defined in the district’s Rate and Method of Apportionment, such as fixed percent or CPI-based caps.

How long do Mello-Roos taxes last on a home?

• They typically last until the CFD bonds are repaid, which can be decades, then the special tax usually ends.

Does Mello-Roos affect mortgage approval?

• Lenders include the special tax as a recurring housing expense, which can reduce the loan amount you qualify for.

Can a seller pay off Mello-Roos at closing?

• Sometimes, but it is uncommon and may require a large payoff; confirm feasibility with the CFD administrator and professionals before pursuing it.