The Mills Act: Property Tax Reduction for Historic Properties

If you live in a San Diego County home with a historic significance, you may qualify for the Mills Act. The Mills Act provides for a property tax reduction for maintaining a historic home.

What is the Mills Act?

The Mills Act was named for San Diego Resident James Mills, also a former State Senator. It provides an important monetary incentive designed to encourage the preservation, maintenance, and restoration of designated historic properties. Much of the information in this article is taken directly from the City of San Diego website.

How are Properties Valued?

Mills Act properties are to be valued using the rental income and expense that could be expected from that property.  Rather than using comparable sales to establish the assessed value.

This generally results in a much lower assessment on your property. This is especially beneficial if the property has been recently purchased. And it is subject to higher property values, and therefore, higher property taxes. See the San Diego County Tax Assessor’s site for tax tips related to the Mills Act.

How do I qualify for the Mills Act?

In order to participate, your home must meet qualifying criteria. These qualifiers include such things as:

• Significant architecture
• Association with a historically significant event or person
• Location in a historic district (such as Marston Hills.)

Once your home is designated as a historical site, you can then apply for a voluntary contract with that city. The application and approval process is accomplished through the city. (or County for unincorporated areas) where the property is located. The Assessor’s office only administers the property tax portion of the Mills Act.

Length of the Mills Act Contract

The term of the Mills Act contract is a self-renewing, 10 year agreement, however, either you, (the property owner), or the city can file for non-renewal. Since the contract follows the property and not the owner, the contract will transfer uninterrupted on the sale of your property.

Historic Designation Does Not Mean Open House

You are NOT required to open the property to the public. The law was revised in 1985 when new legislation relaxed the rules to encourage the preservation of historic properties. Prior to that time, any property under contract had to be open to the public for tours.

Not all historical properties in San Diego County qualify for the Mills Act

Only the cities of San Diego, Chula Vista, Coronado, Escondido, La Mesa, Encinitas, San Marcos, and National City have enacted ordinances to grant a Mills Act agreements. The County of San Diego has also passed an ordinance for historical properties in the unincorporated areas of the County.

Currently, there are approximately 1200 properties under contract with the various cities that receive this property tax benefit.

Does your Home Qualify for the Mills Act?

If you believe you may qualify, and want to learn more about historical designation, see my article, “Increase Your San Diego Home’s Value Through Historic Designation”.

And  you believe your home or property may qualify for historic designation, I have resources for preparing the Historical Designation documents. Please contact me for more information.