To help preserve the historic buildings of Los Angeles, a tax incentive has been created by California state and local governments called the Mills Act. The special law offers homeowners of qualifying historic buildings as much as 70% or more off of their property tax bills. Owners of lofts in a historic building can potentially save thousands of dollars each year. That money can be used to help furnish your loft home, put more money down at purchase to reduce monthly mortgage payments, trade up to a larger loft, or even just put it in your pocket. But, buyers should also be prepared and save some of the money for potential special assessments in the future should build need major restoration.
The Mills Act is the single most important economic incentive program in California for the restoration and preservation of qualified historic buildings by private property owners. The Mills Act Program is administered and implemented by local governments. Mills Act contracts are between the property owner and the local government granting the tax abatement.
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Each local government establishes its own criteria and determines how many contracts it will allow in its jurisdiction. For answers to specific questions such as local eligibility criteria, application procedures, and contract terms, contact the city or county official for your jurisdiction
MILLS ACT LOFTS FOR SALE | MILLS ACT RECENTLY SOLD
The Mills Act offers a substantial reduction in property taxes for owners of qualified historical properties provided that they agree to preserve, restore, rehabilitate, and maintain the historical and architectural character of their properties. Many owners report that they save about 2/3 off of their property taxes. The formula is complex and may vary, so prospective Mills Act home buyers should check with the city, county and a tax professional to determine what the real savings may be.
Despite its clear and considerable value, the Mills Act had been implemented by only twenty-five Los Angeles County jurisdictions as of March 2014. Fortunately, DTLA is included currently. The County of Los Angeles is currently in the process of establishing a Mills Act program that applies only to unincorporated areas. Cities in the county get the first say in applying the mills’ act to their jurisdiction.
Since the Mills Act is typically the only economic incentive tool available to local jurisdictions, the existence of a program at the local level is a good indicator of a particular jurisdiction’s commitment to historic preservation.
Tell us how you would take advantage of the mills’ act with your historic loft building. Leave a comment here.
Little Tokyo Lofts is a Mills Act Property in the DTLA market. Find others. Fill out the online form.
Participants in the program can realize very fruitful property tax savings each year for recently improved or purchased old properties because the valuation of a Mills Act property is determined by the Income Approach to Value rather and not by the common Market approach to calculating appraised value. The Income Approach, divided by a capitalization rate, gives the assessed value of the property. Generally, the income potential for an owner-occupied residential property is calculated by looking at rental rates for comparable nearby properties, while the income from a commercial property is based on actual rent received. Because rental values vary greatly, the actual Mills Act historic property tax savings may vary.
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Copyright © This free information provided courtesy L.A. Loft Blog with the information provided by Corey Chambers, Realty Source Inc, DRE 01889449; MPR Funding Inc NMLS 2000513. We are not associated with the seller, homeowner’s association, or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com, Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties are subject to prior sale or rental. This is not a solicitation if the buyer or seller is already under contract with another broker.
