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June 28, 2017

What You Need To Know About Missed Property Taxes


In the uncertain world of real estate, there remains one constant: if you own a property, you’re probably paying taxes on it. But what happens if an emergency makes it tough to meet your tax payments?

When unexpected events happen, many Americans find themselves without the means to pay their property taxes. Losing your financial stability to overdue property taxes can be a massive burden, with consequences that may take years to fully pan out. If this sounds like your situation, keep reading and get need-to-know information regarding your financial future.

What are property taxes?

Property taxes are annual, biannual or quarterly fees, calculated on the assessed value of your home. The higher your home’s assessed value, the more you will have to pay.

Tax rates are determined by state and local governments, meaning different cities and townships can have drastically different tax rates. Many people don’t read up on the local tax environment and end up with tax burden that’s unmanageable.

What happens if I can’t pay my taxes?

For many Americans, property taxes become an expense they cannot manage. If a homeowner misses a tax payment, the taxing authority will deem their taxes delinquent. From there, the problems can stack up quickly. 

First, your taxing authority will begin charging interest on the amount owed. Interest rates can vary depending on the state, taxing entity and length of delinquency, and it’s impossible to say exactly how much more you may end up paying on your late taxes. You should check with your local taxing authority about your own rates, if you don’t know already.

Eventually, if the delinquent amount isn’t paid, it’s likely a tax lien will be placed on your property, which takes priority over all other liens. Tax liens make title to the property “unclear” and will keep an owner from selling or refinancing the property until cleared. This makes it much harder for you to sell the property and get clear of your property tax debt that way.

If you cannot clear a lien, the taxing authority may order a tax sale. If that happens, your property will be sold at auction, much like a foreclosed house. There are two ways this sale can happen: as a tax deed sale, or as a tax lien sale.

In a tax deed sale, the highest bidder on the property becomes its owner.

In a tax lien sale, the outstanding lien on the home is sold to an investor. In this case, a homeowner owes the investor for their back taxes. If the homeowner continues to miss payments, the investor may move to foreclose the property and take ownership. Not only that, a tax lien sale doesn’t stop property taxes coming due – they can build up all over again.

What can I do?

There’s no avoiding property tax, and if you already owe back taxes, not paying can hurt your financial future in a big way.

In some cases, you might be able to dispute the assessed value of your home, but this will only reduce the burden, not get rid of it altogether. You might also be able to get tax abatement in some cities, but abatements are rarely allowed to homeowners with delinquent taxes against them.

Sell your home fast

If you are afraid you won’t be able to keep up with property tax, why not stop the process before it even begins? Don’t get trapped in a financial spiral. Buy Every Home can help you sell your home for cash quickly, so you can escape sky-high tax rates and live stress-free, without debt weighing on your shoulders.

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