Monthly Archives: March 2015

The Future of San Clemente Hospital

If you drive through neighborhoods in San Clemente, Capistrano Beach, San Juan Capistrano, or Dana Point, you will see “Save Our Hospital” signs in some front yards. And you may wonder, “What’s that all about?” I wondered the same. That’s how I became aware of what’s happening with the hospital in San Clemente.

Here’s what you need to know.

MemorialCare Health System operates San Clemente hospital (654 Camino de los Mares) as a satellite of Saddleback Memorial Medical Center in Laguna Hills. MemorialCare revealed plans to close the 73-bed facility in 2015 and replace it with a $40 million comprehensive outpatient medical center with advanced urgent care. The company says the change is necessary to deliver more efficient care at lower per-patient costs.

The reason you’re seeing “Save Our Hospital” signs in front yards is because the San Clemente Hospital has been the area’s main source of medical care services for more than 40 years. Opponents of the proposal say the loss of the emergency room that treats 15,000 visitors and admits more than 4,000 patients annually will “leave a 40-mile void between Oceanside and Mission Viejo.” I live in Capistrano Beach so, today, I live less than 2 miles from a hospital. If the San Clemente location closes, I’ll be 10 miles from the nearest ER.

Source: Dana Point Times

Source: Dana Point Times

According to MemorialCare, transforming the hospital and emergency room facility into a comprehensive outpatient medical pavilion with 24/7 advanced urgent care will better serve the population. Still, people are worried about the lack of a nearby ER. State law only allows ambulances to transport 911 patients to a state-licensed emergency room attached to an acute-care hospital. Opponents say San Clemente needs a hospital, and shutting down an ER in South Orange County as the population grows and traffic on the I-5 worsens just puts pressure on remaining ERs and on emergency medical services.

One possibility is to push for state legislation to allow a freestanding ER in San Clemente affiliated with Saddleback Memorial Medical Center in Laguna Hills. The problem is that it could take three years to legalize such a facility. Will MemorialCare be willing to put a three-year moratorium on its plan to allow time for the freestanding ER to come to fruition? That remains to be seen.

Just this past Thursday (March 25), the board of MemorialCare announced that it is continuing to assess the feasibility of legislation to allow the San Clemente facility to maintain ER services. City councils in San Clemente and San Juan Capistrano have adopted resolutions to oppose closure of the existing ER and hospital, so the debate continues.

As a resident in South Orange County, and a realtor who truly believes this is a great community for my buyers, I feel more comfortable having ER services nearby. We will see how this issue evolves.

To stay up to date on developments, check out the Dana Point Times and OC Register.

Sources for this post:
Dana Point Times
OC Register

31071 Via Cristal

This week’s listing is in San Juan Capistrano (Address: 31071 Via Cristal.). Listing price: $925,000

home 1 home 2 home 3

Here’s why I think this is a great buy:

  • It’s in a nice, quiet, family-friendly neighborhood near a ranching area with horse stables
  • It’s spacious, with 4 beds and 2.5 baths in more than 3,100 square feet
  • It’s less than $300/square foot, which is very competitive in south Orange County
  • The backyard pool is HUGE
  • There’s a great office space in addition to the 4 bedrooms
  • There is a 3-car garage
  • It’s well-finished and updated–you can’t tell it was built in 1976
  • It has solar heat and air, which is eco-friendly and will save money on the electricity bill

Want to check it out? Contact me today.

What the heck is Mello Roos?

If you’re new to Orange County, or even if you’ve been here a while, you’re probably curious about Mello-Roos. Many home buyers become acquainted with it when they see it in listings, ie “No Mello-Roos!” Or, you may have friends or family members who own homes in a Mello-Roos area and mention it (usually as a complaint or a warning). Let’s get the facts.

The newer homes in the Talega community of  San Clemente have Mello-Roos taxes. Click the image for more info.

The newer homes in the Talega community of San Clemente have Mello-Roos taxes. Click the image for more info.

What is Mello-Roos?
Mello-Roos is simply a special tax assessed to homeowners in a community as repayment for bonds used to fund the infrastructure within their community. This is why Mello-Roos has a negative connotation–it’s a tax. The monthly payment for a home in a Mello-Roos community will be significantly higher than it would be for a home in a non Mello-Roos community.

Advantages of a Mello-Roos District to Home Buyers

  • New schools, parks, recreation centers, etc can be built and funded using the revenue generated from the Mello-Roos income
  • More housing inventory will be created when undeveloped locations are built up
  • Generally speaking, low crime rates and highly desirable new schools are common in Mello-Roos communities

Disadvantages of a Mello-Roos District to Home Buyers

  • Cost of housing may be increased because of the tax, possibly limiting the amount of prospective buyers when it comes time for resale
  • Maintenance of the improvements could be more costly than anticipated

Why is it called Mello-Roos?
The term Mello-Roos was derived from the names of its co-authors, Senator Henry Mello and Mike Roos. It is also generally termed as the Community Facilities District Act (CFD). The CFD started when people in California voted for Proposition 13 in 1978 to limit property taxation. Therefore, new initiatives were considered to finance public constructions and improvements. In 1982, the California State Legislature made Mello-Roos legitimate.

Why do certain communities have Mello-Roos while others don’t?
Two thirds of a community must vote in favor of becoming a Mello-Roos district for it to happen. What’s frustrating to many home buyers is that they weren’t part of the community when the vote was taken.

How does a Mello-Roos community operate?
In a Mello-Roos community, bonds are issued to help fund the community infrastructure. Normal services and infrastructure would include police services, schools, roads, ambulance and fire protection services, utility connection, sewer lines, and streetlights. Once Mello-Roos is established, residents must repay the bonds in order to fund ongoing projects. A special tax is assessed to the homeowners as the repayment method and levied yearly. An ongoing lien is used to make sure that the taxes are safe and secured.

What about a non Mello-Roos community? How do they pay for infrastructure? 
In a non Mello-Roos community, the infrastructure and services would be paid for by the surrounding residents or the actual builder.

Where is Mello-Roos most commonly found?
In Orange County, most cities with new construction will have at least one community with Mello-Roos; however, the southern portion of Orange County is where it is most prevalent. Likely cities might include: Irvine, Mission Viejo, Aliso Viejo, Tustin, Laguna Hills, Rancho Santa Margarita, Coto De Caza, and San Juan Capistrano.

What year homes have Mello-Roos?
Almost always, Mello-Roos is found in areas with newer neighborhoods and subdivisions built between 1994 and the present.

How long does Mello-Roos typically last?
The length of the Mello-Roos tax varies from subdivision to subdivision. Fifteen years from the original build date is about average. The payment very rarely extends beyond 30 years or is shorter than 7 years.

How much is it on a monthly basis?
Depending on the year of construction, it can range anywhere from $25 to over $300 per month; the actual tax is usually collected annually or semi-annually.
So, should you consider a home in a Mello-Roos community? It’s really up to you. It’s best to ask yourself if the amenities of a Mello-Roos community warrant the increased monthly payment. For many people, the attraction of a newly built home in a newer community is very high and worth the expense. No matter what, if the home was built after 1994, ask if there is Mello-Roos tax. It could be a significant part of your finances for years to come.

 Source: Realty Times

24272 Briones Dr.

This week’s listing is in Laguna Niguel (Address: 24272 Briones Dr.). Listing price: $624,900

home 1 home 2 home 3 home 4

Here’s why I think this is a great buy:

  • It’s in a great part of family-friendly Laguna Niguel
  • It’s spacious, with 3 beds and 2 baths in almost 2,000 square feet
  • It has a competitive price per square foot ($322/square foot)
  • Zillow estimates its value at higher than the asking price (Zillow estimates $736,365)
  • There is a homeowner’s association for upkeep and the fee is reasonable ($169/month)
  • There is a great backyard with great views
  • It’s near Laguna Niguel Regional Park
  • The schools are excellent: Laguna Niguel Elementary is a 9, Aliso Viejo Middle School is a 9, and Aliso Niguel High is a 10

Want to check it out? Contact me today.

804 Futura, San Clemente

This week’s listing is in San Clemente (Address: 804 Futura). Listing price: $924,900

house 1 house 2 house 3 house 4

Here’s why I think this is a great buy:

  • It’s in Rancho San Clemente, which is closer to the beach and downtown San Clemente than Talega, but with the craftsmanship of Talega that so many people love
  • At 3,000 square feet, it has a competitive price per square foot ($308/square foot)
  • It has 5 bedrooms and 3.75 baths–a great layout for a family
  • The property is in a cul-de-sac–also great for a family
  • The backyard is an entertainer’s dream: Outdoor fireplace, built-in BBQ, travertine bar, dining area, jacuzzi…need I say more?
  • The interior is nicely upgraded, especially the kitchen
  • There’s a 3-car garage with custom storage and space for a workout area if that’s your thing
  • The schools are rated well: Clarence Lobo Elementary is a 7, Bernice Ayer Middle School is an 8, and San Clemente High School is an 8
  • There are no Mello Roos taxes in this neighborhood

Want to check it out? Contact me today.

Tax time, part 3: Tax breaks for capital improvements

If you’re looking to sell your home after making improvements to it, there may be some tax benefits to you. It’s smart to keep track of what you spend on capital improvements to your home because there are tax breaks when you sell the property.



It’s no secret that finishing your basement will increase your home’s value. What you may not know is the money you spend on this type of so-called capital improvement could also help lower your tax bill when you sell your house.

Tax rules let you add capital improvement expenses to the cost basis of your home. Why is that a big deal? Because a higher cost basis lowers the total profit—capital gain, in IRS-speak—you’re required to pay taxes on.

The tax break doesn’t come into play for everyone. Most homeowners are exempted from paying taxes on the first $250,000 of profit for single filers ($500,000 for joint filers). If you move frequently, maybe it’s not worth the effort to track capital improvement expenses. But if you plan to live in your house a long time or make lots of upgrades, saving receipts is a smart move.

What Counts As a Capital Improvement?
Although you may consider all the work you do to your home an improvement, the IRS looks at things differently. A rule of thumb: A capital improvement increases your home’s value, while a non-eligible repair just returns something to its original condition. According to the IRS, capital improvements have to last for more than one year and add value to your home, prolong its life, or adapt it to new uses.

Capital improvements can include everything from a new bathroom or deck to a new water heater or furnace. Page 9 of IRS Publication 523 has a list of eligible improvements.

There are limitations. The improvements must still be evident when you sell. So if you put in wall-to-wall carpeting 10 years ago and then replaced it with hardwood floors five years ago, you can’t count the carpeting as a capital improvement. Repairs, like painting your house or fixing sagging gutters, don’t count. The IRS describes repairs as things that are done to maintain a home’s good condition without adding value or prolonging its life.

There can be a fine line between a capital improvement and a repair, says Erik Lammert, former tax research specialist at the National Association of Tax Professionals. For instance, if you replace a few shingles on your roof, it’s a repair. If you replace the entire roof, it’s a capital improvement. Same goes for windows. If you replace a broken window pane, repair. Put in a new window, capital improvement.

One exception: If your home is damaged in a fire or natural disaster, everything you do to restore your home to its pre-loss condition counts as a capital improvement.

How Capital Improvements Affect Your Gain
To figure out how improvements affect your tax bill, you first have to know your cost basis. The cost basis is the amount of money you spent to buy or build your home including all the costs you paid at the closing: fees to lawyers, survey charges, transfer taxes, and home inspection, to name a few. You should be able to find all those costs on the settlement statement you received at your closing.

Next, you’ll need to account for any subsequent capital improvements you made to your home. Let’s say you bought your home for $200,000 including all closing costs. That’s the initial cost basis. You then spent $25,000 to remodel your kitchen. Add those together and you get an adjusted cost basis of $225,000.

Now, suppose you’ve lived in your home as your main residence for at least two out of the last five years. Any profit you make on the sale will be taxed as a long-term capital gain. You sell your home for $475,000. That means you have a capital gain of $250,000 (the $475,000 sale price minus the $225,000 cost basis). You’re single, so you get an automatic exemption for the $250,000 profit. End of story.

Here’s where it gets interesting. Had you not factored in the money you spent on the kitchen remodel, you’d be facing a tax bill for that $25,000 gain that exceeded the automatic exemption. By keeping receipts and adjusting your basis, you’ve saved about $5,000 in taxes based on the  15% tax rate on capital gains. Well worth taking an hour a month to organize your home improvement receipts, don’t you think?

Related: Tax and Home Records Checklist: What to Keep and For How Long

The top rate for most homesellers remains 15%. For sellers in the 39.6% income tax bracket, the cap gains rate is 20%.

Watch Out for These Basis-Busters
Some situations (below) can lower your basis, thus increasing your risk of facing a tax bill when you sell. Consult a tax adviser.

  • If you use the actual cost method and take depreciation on a home office, you have to subtract those deductions from your basis.
  • Any depreciation available to you because you rented your house works the same way.
  • You also have to subtract subsidies from utility companies for making energy-related home improvements or energy-efficiency tax credits you’ve received.
  • If you bought your home using the federal tax credit for first-time homebuyers, you’ll have to deduct that from your basis too, says Mark Steber, chief tax officer at Jackson Hewitt Tax Services.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.


Spotlight on: Festival of the Whales

It’s that time of year again here in Dana Point–Festival of Whales time.

festival of the whales
2015 will mark the 44th Annual Dana Point Festival of Whales celebration. Visitors come from all over Southern California to celebrate the annual migration of gray whales from Alaska to Mexico.  Fun fact: About 25% of the migrating whale population follows the coastline throughout their migration, coming especially close to shore at Dana Point. During peak season (December through March), 40-50 whales pass by Dana Point every day, making Dana Point Harbor one of the best places to whale watch along the Southern California coast.

This year, there have been some amazing Orca sightings right here in Dana Point!

This year, there have been some amazing Orca sightings right here in Dana Point!

Festival highlights include: Opening day parade, Whale of a Block Party, art exhibits, classic car exhibits, paddling events, sand sculpting, concerts on land and water, environmental activities, educational opportunities, interpretive crafts, and activities for kids.

The Festival is this weekend (March 7-8) and next weekend (March 14-15). Learn more about special whale watching trips during the Festival here.  Or, if you can’t make it for the Festival, be sure to schedule a whale watching trip before the season ends. You can sign up here (Tuesdays are half price).

See you at the Festival!


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