Irvinecommuter
New member
qwerty said:
Sorry page 5...last paragraph. The general public does not mean everyone in OC or Irvine...it means everyone in the tax district's authority (the mello roos district itself).
The Branches - New homes in Woodbridge (Alderwood) by William Lyon
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NEW -> Contingent Buyer Assistance Program
Sorry page 5...last paragraph. The general public does not mean everyone in OC or Irvine...it means everyone in the tax district's authority (the mello roos district itself).
Each development is separate tax mello roos district. As long as there is standard form/rate for that district, it is a like rate.
Each mello roos district is a "jurisdiction" for tax purpose.
The IRS opinion is clear that MR can become non-deductible if 1) they are not taxed at a liked rate or 2) benefit only a portion of the jurisdiction. But there is nothing to indicate that the ones being assessed in Irvine fail to do either one.
Qwerty, you are assuming that the jurisdiction is Irvine or OC or California. The jurisdiction is just the mello roos district itself. If the mello roos is assess in a like rate within the mello district and does not only benefit a particular property or portion of that district, it is tax deductible.
The 2003 opinion is pretty explicit to me. So is the IRS' continuing to allow for MR to be deducted on taxes. FTB's attempt to tax MR was halted by the February 2012 IRS opinion and the FTB also allows for MR to be deducted. They would not have backed off otherwise.
Why would that be? The FTB stopped its attempt to collect because of the IRS opinion.
I'm not a CPA (although there is one lurking
) But I have no doubt that the vast majority of homeowners in Irvine are taking them as deductions on the advice of their CPA/accountant.
Which reminds me, NONE OF THESE IS MEANT TO BE TAX ADVICE! Please do not take tax advice from strangers posting an internet board.
Well I take it back, even the local benefit criteria is debatable. The way I view it is this way, lets say u are buying a home in a brand new development, you will own the sidewalk in front of your house, but the city is going to build it and they will just collect payment from you in the form MR on your property tax bill, in this scenario, it enhances the value of your house, because if u didn't want the sidewalk your property value would likely be lower. So in this scenario I would MR is not deductible because the assessed MR tax only benefits the one specific house.
While I see what commuter is saying about the MR tax not directly affecting the value (or for the benefit) of the assessed home, I would view the MR allocation charged on your property tax bill as your allocation for building that sidewalk in front of your house and therefore does benefit the property being assessed and therefore the MR is not deductible. The substance of the MR tax is that it is your allocation for the infrastructure that benefits you. I guess commuter is taking the literal interpretation (which could be right or wrong, just like I could bet right or wrong) and therefore believes MR is deductible.
Honestly, I will just do whatever my CPA says
I will find and kill you! Ambiguity is good!
In my world, ambiguity is not good. Taking the wrong side could lead to a restatement of financials and the SEC asking questions.
Sorry page 5...last paragraph. The general public does not mean everyone in OC or Irvine...it means everyone in the tax district's authority (the mello roos district itself).
Irvinecommuter
New member
irvinehomeowner said:
Each development is separate tax mello roos district. As long as there is standard form/rate for that district, it is a like rate.
Each mello roos district is a "jurisdiction" for tax purpose.
The IRS opinion is clear that MR can become non-deductible if 1) they are not taxed at a liked rate or 2) benefit only a portion of the jurisdiction. But there is nothing to indicate that the ones being assessed in Irvine fail to do either one.
qwerty
Well-known member
Commuter - I read all of page 5 of the 2003 IRS ruling I don't see any statement that MR taxes are not for local benefit. I would say that the first two criteria are still unclear, but the third criteria is that taxes can not be deducted if they are for local benefits (streets, sewer, etc) and it seems clear that MR provide only local bemefits
Irvinecommuter
New member
qwerty said:
Qwerty, you are assuming that the jurisdiction is Irvine or OC or California. The jurisdiction is just the mello roos district itself. If the mello roos is assess in a like rate within the mello district and does not only benefit a particular property or portion of that district, it is tax deductible.
The 2003 opinion is pretty explicit to me. So is the IRS' continuing to allow for MR to be deducted on taxes. FTB's attempt to tax MR was halted by the February 2012 IRS opinion and the FTB also allows for MR to be deducted. They would not have backed off otherwise.
Irvinecommuter
New member
qwerty said:
Why would that be? The FTB stopped its attempt to collect because of the IRS opinion.
irvinehomeowner
Well-known member
@Irvinecommuter:
I'm still not convinced (and neither is the CPA, Tim Hilger, on your link) that MRs and 1915 assessments are black and white deductible.
I don't know what your background is, but unless a CPA who is experienced in this matter can point me to some documentation that states it is absolutely deductible (not "may be")... the jury is still out.
And don't get me wrong, I would like them to be deductible... luckily, my current home doesnt have MRs or 1915s... so I'm safe for now.
I'm still not convinced (and neither is the CPA, Tim Hilger, on your link) that MRs and 1915 assessments are black and white deductible.
I don't know what your background is, but unless a CPA who is experienced in this matter can point me to some documentation that states it is absolutely deductible (not "may be")... the jury is still out.
And don't get me wrong, I would like them to be deductible... luckily, my current home doesnt have MRs or 1915s... so I'm safe for now.
Irvinecommuter
New member
irvinehomeowner said:
I'm not a CPA (although there is one lurking
) But I have no doubt that the vast majority of homeowners in Irvine are taking them as deductions on the advice of their CPA/accountant.Which reminds me, NONE OF THESE IS MEANT TO BE TAX ADVICE! Please do not take tax advice from strangers posting an internet board.
qwerty
Well-known member
Irvinecommuter said:
Well I take it back, even the local benefit criteria is debatable. The way I view it is this way, lets say u are buying a home in a brand new development, you will own the sidewalk in front of your house, but the city is going to build it and they will just collect payment from you in the form MR on your property tax bill, in this scenario, it enhances the value of your house, because if u didn't want the sidewalk your property value would likely be lower. So in this scenario I would MR is not deductible because the assessed MR tax only benefits the one specific house.
While I see what commuter is saying about the MR tax not directly affecting the value (or for the benefit) of the assessed home, I would view the MR allocation charged on your property tax bill as your allocation for building that sidewalk in front of your house and therefore does benefit the property being assessed and therefore the MR is not deductible. The substance of the MR tax is that it is your allocation for the infrastructure that benefits you. I guess commuter is taking the literal interpretation (which could be right or wrong, just like I could bet right or wrong) and therefore believes MR is deductible.
Irvinecommuter
New member
qwerty said:
Honestly, I will just do whatever my CPA says
qwerty
Well-known member
I'm a CPA, but I don't specialize in income taxes, I work at a publicly traded company and my specialty is financial accounting(making sure all of our accounting is correct). My wife and I make too much money and get no benefit from any type of property tax deduction so for me this is a moot point, but I do like to read and interpret guidance.
I think commuter and I are on different sides based on our respective interpretations of the law (which is very common in accounting - u can put 10 CPAs in a room, give them guidance and you can get 10 different answers).
I think commuter and I are on different sides based on our respective interpretations of the law (which is very common in accounting - u can put 10 CPAs in a room, give them guidance and you can get 10 different answers).
BunkMoreland
New member
I'm also a CPA that doesn't specialize in taxes.
It's not clear to me what local means... does it mean the sidewalk in front of my property? my street? my neighborhood? if it includes a park that is accessed by all county residents, then surely I'd argue its not merely a local benefit.
I'd deduct it and would be prepared to argue it in an audit. I'd also be prepared for a negative opinion just in case....
It's not clear to me what local means... does it mean the sidewalk in front of my property? my street? my neighborhood? if it includes a park that is accessed by all county residents, then surely I'd argue its not merely a local benefit.
I'd deduct it and would be prepared to argue it in an audit. I'd also be prepared for a negative opinion just in case....
qwerty
Well-known member
Maybe I should right a letter to the IRS and give them a specific example to opine on. There is too much room for interpretation in their current guidance. Which I guess is good for taxpayers. The good thing, is this is debatable, so worst case scenario u get hit with penalties and interest. No one here is going to get prison time for deducting MR 
Irvinecommuter
New member
qwerty said:Maybe I should right a letter to the IRS and give them a specific example to opine on. There is too much room for interpretation in their current guidance. Which I guess is good for taxpayers. The good thing, is this is debatable, so worst case scenario u get hit with penalties and interest. No one here is going to get prison time for deducting MR
I will find and kill you! Ambiguity is good!
qwerty
Well-known member
Irvinecommuter said:qwerty said:Maybe I should right a letter to the IRS and give them a specific example to opine on. There is too much room for interpretation in their current guidance. Which I guess is good for taxpayers. The good thing, is this is debatable, so worst case scenario u get hit with penalties and interest. No one here is going to get prison time for deducting MR
I will find and kill you! Ambiguity is good!
In my world, ambiguity is not good. Taking the wrong side could lead to a restatement of financials and the SEC asking questions.
BunkMoreland
New member
For MR deduction, ambiguity is better than what I think they'll say
ps99472
New member
Here's my CPA's response..
Yes, this has been quite a controversy in the tax world. Even the IRS admits it has given conflicting advice. Generally, assessments that are based on anything other than the assessed value of the property may be deductible if they are levied for the general public welfare, by a proper taxing authority, at a like rate, or on owners of all properties in the jurisdiction. Amounts for specific properties for a local benefit can't be deducted, but local benefit assessments imposed to repair or maintain those local benefits may be deducted. So that in and of itself gets a bit confusing, as we just don't know how each assessment is spent (even though theoretically, the government should be able to explain every penny, right?).
The difficult issue is determining which part is deductible. Even though a property tax bill may list items that the tax is comprised of, it is impossible to get a breakdown from the county or the Mello-Roos district office who will provide an annual breakdown of how the Mello-Roos payment was spent. There have been a lot of even government officials who could not get the breakdown of how the assessments were spent. So, bottom line, the common practice is to deduct the full amount paid on your property tax statement.
At one point in the year last year we thought we were going to have to report parcel numbers on the returns so California can start policing and trying to pick at which part is not deductible, but that is just not practical and has been struck down (at least for now).
Yes, this has been quite a controversy in the tax world. Even the IRS admits it has given conflicting advice. Generally, assessments that are based on anything other than the assessed value of the property may be deductible if they are levied for the general public welfare, by a proper taxing authority, at a like rate, or on owners of all properties in the jurisdiction. Amounts for specific properties for a local benefit can't be deducted, but local benefit assessments imposed to repair or maintain those local benefits may be deducted. So that in and of itself gets a bit confusing, as we just don't know how each assessment is spent (even though theoretically, the government should be able to explain every penny, right?).
The difficult issue is determining which part is deductible. Even though a property tax bill may list items that the tax is comprised of, it is impossible to get a breakdown from the county or the Mello-Roos district office who will provide an annual breakdown of how the Mello-Roos payment was spent. There have been a lot of even government officials who could not get the breakdown of how the assessments were spent. So, bottom line, the common practice is to deduct the full amount paid on your property tax statement.
At one point in the year last year we thought we were going to have to report parcel numbers on the returns so California can start policing and trying to pick at which part is not deductible, but that is just not practical and has been struck down (at least for now).
irvinehomeowner
Well-known member
Back on topic:
How fast will these homes sell? Hard to believe the first 12 are already sold.
This is causing a ruckus in the Woodbridge resale market. Certain 3CWG models that used to languish at the high $700ks to low $800ks are going pending fast... remember those three 3CWG ones I mentioned last week? All are pending after only a few days. Redonkulous.
How fast will these homes sell? Hard to believe the first 12 are already sold.
This is causing a ruckus in the Woodbridge resale market. Certain 3CWG models that used to languish at the high $700ks to low $800ks are going pending fast... remember those three 3CWG ones I mentioned last week? All are pending after only a few days. Redonkulous.