Everything You Need To Know The Mills Act Property Tax Savings In San Diego
When it comes to purchasing a home, many buyers are enchanted by the charm and character of historic properties. However, owning a piece of history can come with its own set of financial considerations. One significant advantage for buyers of historic homes in San Diego is the potential property tax savings offered through the Mills Act.
What is the Mills Act?
The Mills Act is a California state law enacted in 1972 that offers property tax relief to owners of qualified historic properties. By entering into a contract with the local government, property owners agree to preserve and maintain the historic character of their property. In return, they receive a substantial reduction in property taxes, often ranging from 40% to 60%.
How Does the Mills Act Work?
- Historic Designation: To qualify for the Mills Act, your property must be designated as a historic property. This can be through local designation by the City of San Diego, listing on the California Register of Historical Resources, or inclusion on the National Register of Historic Places.
- Application Process: Property owners must apply through the City of San Diego’s Historical Resources Board (HRB). The application includes detailed documentation of the property’s historical significance and current condition.
- Contract Terms: Once approved, the property owner enters into a Mills Act contract with the City. These contracts are typically for a minimum of 10 years and automatically renew each year unless terminated. The contract requires the owner to maintain the property according to specific preservation standards.
- Tax Assessment: Under a Mills Act contract, the property’s assessed value for tax purposes is determined using a different methodology than typical properties. This often results in significant tax savings.
What are some of the Benefits of the Mills Act?
- Financial Savings: The primary benefit is the reduced property taxes, which can make owning and maintaining a historic home more affordable.
- Preservation: By participating in the Mills Act, homeowners contribute to preserving San Diego’s architectural and cultural heritage.
- Increased Property Value: Well-maintained historic homes can appreciate in value and be highly desirable in the real estate market.
Responsibilities of Mills Act Homeowners
WHILE THE MILLS ACT OFFERS SUBSTANTIAL BENEFITS, IT ALSO COMES WITH RESPONSIBILITIES:
- MAINTENANCE: HOMEOWNERS MUST MAINTAIN THE PROPERTY IN ACCORDANCE WITH THE SECRETARY OF THE INTERIOR’S STANDARDS FOR REHABILITATION AND ANY ADDITIONAL LOCAL REQUIREMENTS.
- PERIODIC INSPECTIONS: THE CITY OF SAN DIEGO MAY CONDUCT PERIODIC INSPECTIONS TO ENSURE COMPLIANCE WITH THE CONTRACT TERMS.
- REPORTING: HOMEOWNERS MAY BE REQUIRED TO SUBMIT PERIODIC REPORTS DOCUMENTING THE MAINTENANCE AND PRESERVATION ACTIVITIES UNDERTAKEN.
Steps to Apply for the Mills Act in San Diego
- RESEARCH: VERIFY THAT YOUR PROPERTY MEETS THE CRITERIA FOR HISTORIC DESIGNATION.
- PREPARE DOCUMENTATION: GATHER HISTORICAL DATA, CURRENT PHOTOGRAPHS, AND ANY PREVIOUS RESTORATION WORK.
- SUBMIT APPLICATION: COMPLETE AND SUBMIT THE MILLS ACT APPLICATION TO THE SAN DIEGO HISTORICAL RESOURCES BOARD.
- REVIEW AND APPROVAL: THE HRB WILL REVIEW THE APPLICATION, AND IF APPROVED, YOU WILL ENTER INTO A MILLS ACT CONTRACT WITH THE CITY.
- ENJOY SAVINGS: ONCE THE CONTRACT IS IN PLACE, YOU CAN START ENJOYING THE PROPERTY TAX SAVINGS WHILE PRESERVING YOUR HISTORIC HOME.
IF YOU’RE CONSIDERING PURCHASING A HISTORIC HOME, THERE ARE A FEW DIFFERENT APPROACHES. BUYING A HOME THAT HAS ALREADY BEEN HISTORICALLY DESIGNATED, OR BUYING A HOME THAT COULD POTENTIALLY MEET THE CRITERIA AND APPLYING ON YOUR OWN.
If you have any questions or are interested in looking into a historic home in San Diego, feel free to reach out to me directly – I am a San Diego REALTOR & can help you determine the next steps!