3 Things to Help Avoid High Tax Rates in Temecula Housing
One of the most important things to do when buying a house in Temecula or Southern California is to learn about the communities and verify tax rates. Some communities can double your tax rate, going from 1.1% up to 2%. These special assessments, or Mello-Roos taxes, can be killers, especially if you’re the type of person who likes to use the disposable income for travel, nights out, or, even more important, saving for retirement.
In this blog post and video, we’re going to talk about how to avoid high rates in Temecula or Southern California in general. As a real estate broker, I feel that one of the most important things I can do for buyers gives them options and explain the pros and cons of each home and community. Your tax rate is a huge part of that! Having a payment every month that you feel comfortable with is very important.
Everyone knows that money can be one of the biggest contributors to added stress in your life or relationship. Homes are already going to be the biggest investment of your life, so adding thousands of dollars in taxes a year to that investment might not be the best option for many people.
“Never buy a house at the price the bank approves you at; buy a home at a payment that you feel comfortable with.” Joel Daniel, Broker, Greenleaf Real Estate
What are special assessments, or Mello Roos?
Let’s say a home builder wants to build a new community in Temecula. The city of Temecula is going to tell them they need schools, roads, sidewalks, streetlights, etc. The builder, of course, does not want to take on the debt of building all the infrastructure for the new community, so they pass this along in the form of Mello-Roos or special assessments to the homeowners.
General Rule of Thumb
I don’t know how this works in other states, but the newer the home, the higher the tax rate in Southern California. San Diego County, Riverside County, Orange County, and Los Angeles County are all going to have a base tax rate of around 1.1%. If your home was built after 2005, you can expect an additional tax of.4% to 1%.
Proposition 13 is a huge advantage for Temecula homeowners. California’s home prices, when compared to the rest of the country, are more like hills and valleys. A home that was purchased in 2010 in Temecula has doubled or tripled in value. This is one of the reasons Proposition 13 was introduced. If your Temecula home doubles in price in 7-8 years, that’s a ton of extra tax money coming out of your pocket. Proposition 13 limits or restricts the rate of assessment to 2% per year and limits taxes to 1% of the assessed value.
Buy a home in Temecula with a lower tax rate.
This is straight common sense, but buy a home in Temecula in a low-tax community. FYI, these homes are going to be a little bit older, built in the 1980s to late 1990s. Homes built in the 1980s have a distinct appearance when compared to newer construction.
I’m on the fence when buying older homes in some communities. Sometimes they have orange-colored tile roofs that I don’t necessarily like. Inside, you’ll find lower ceilings and a less open floor plan than in newer homes.If you are okay with this, then by all means, this is a great way to go. If you are looking for communities with low tax rates, I produced a video and article called “4 Low Tax Rate Communities in South Temecula” and “The Ultimate Low Tax Rate Community in Temecula.”
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