Wednesday, May 21, 2014

How Purchasing a Mills Act Home is Like Winning the Lottery Every Year

Construction of this 5 bedroom home was completed in 1912

What is the Mills Act?

Enacted in 1972 by the state of California participating local governments (cities and counties) grant authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their properties to receive property tax relief.
The Mills Act is the single most important economic incentive program in California for the restoration and preservation of historic buildings by private property owners.  

How does a property qualify for the Mills Act?

It must meet qualifying criteria such as significant architecture, association with a historically significant event or person, or location in a historic district. Once designated as a historical site, the owner enters into a voluntary contract with the City of San Diego. 

You may be asking yourself, how is owning a Mills Act home like winning the lottery? 

One of the biggest advantages of owning a home that is approved under the Mills Act is a significant reduction in the YEARLY property taxes paid.

For Example:

Annual property taxes in San Diego county generally cost about 1.25% of the purchase price. If you buy a $2,800,000 home then you would calculate your yearly taxes:
$1,395,000 X 0.0125 = $17,437.50
Under a Mills Act contract: the property receives an average savings of 50% with a range of property tax reduction between 25% and 75%.*
Featured Property: Prospect Street, La Jolla, CA 92037 is part of the Mills Act and enjoys annual property taxes of $4,432.60.

Over $13,000 in savings each year on property taxes! 

FAQs:

  • What is the term of the Mills Act Agreement? The terms of the Mills Act agreements are established by state law. The initial term of the agreement is ten years.*(Source)
  • If I sell my property, does the new owner have to apply again to obtain the Mills Act? If you own a property that has been designated as historical by the Historical Resources Board and you have a Mills Act agreement recorded on your property, the Mills Act benefits go with the land. New owners "inherit" the agreements benefits and responsibilities.*(Source
  • What are some intangible benefits from historical designation that I may not know about? Historical districts benefit from improved image; property values can increase substantially as the overall character of the neighborhood improves. Owners of designated properties also find that having a Mills Act agreement and the prospect of lower property taxes for the purchaser actually helps them sell their buildings.*(Source)
  • Do I have to open my home to the public if I have a Mills Act contract? No. In 1984 the Mills Act was changes so that you never have to open your home to the public as a condition of your Mills Act contract.*(Source)

Typically, homeowners who purchase historic landmark properties are passionate about preserving and enjoying the rich architectural heritage that becomes yours when you call a historic landmark "home".

Do you have a connection to preserving History? Join the homeowners of San Diego and make one of these Mills Act homes all yours. Contact Teresa Schumacher for a private tour or help with submitting an offer on one of these features beauties.


Want to learn more? Check out Historical Resources: Benefits and Responsibilities




*Source: SanDiego.gov