Few people have been more universally hated throughout history than tax collectors. They take your hard-earned money, but it always seems like too much for what the government they represent provides in return. It's a story as old as civilization. Nobody likes paying taxes.
Whether they like it or not, most people do pay their taxes because the consequences of not paying can be loss of property or freedom. If you own real estate, you must pay property taxes or risk losing your home.
The government assesses a value on your property and uses the taxes it collects to fund police, roads, public schools, libraries, and more. The government plans on having this money and takes tax collection extremely seriously.
Most people pay the taxes they owe on their home, as well as principal and interest and sometimes homeowner association dues, as part of their monthly mortgage payment to their lender. When the annual fee is due, the lender pays the property taxes on the homeowner's behalf from the escrow account. Sometimes lenders may not collect property taxes as part of the monthly mortgage payment and the homeowner must pay it on their own. A homeowner who is experiencing financial difficulty may skip the tax payment because they believe it's more important to pay their mortgage or other bills.
However it's supposed to be paid, if the government taxing authority does not receive the taxes it assesses on your property for a long enough period of time, you are considered delinquent and a lien is placed on the property.
Ways you can lose your home if you are delinquent on property taxes:
The first way is that the government taxing authority takes your home and sells it to pay your debt. The government takes taxes so seriously that tax liens are typically given priority over other liens, including mortgages. There are two ways the government can handle your lien, depending on where you live.
- The first is by selling the property to the highest bidder, and the purchaser gets the deed to the property.
- The second is by selling a tax lien certificate of purchase. The purchaser gets the right to collect the debt. If they do not receive the delinquent amount, they can foreclose or convert the certificate to a deed.
The second way you can lose your home is that, if the lender pays your taxes for you and you don't reimburse them, the lender will foreclose on you. Because tax liens are given priority over mortgages, the lender may pay the taxes for you to protect its own interest, then add that amount to your loan. Failing to reimburse the lender for the taxes you owe to them is considered the same as defaulting on mortgage payments, and foreclosure happens the same way.
Homeowners in most states have the right to buy back their home after it's been lost in a tax sale. However, they must do so within a certain time period, and must pay the purchaser the amount they paid plus interest.
What can you do if you are delinquent on property taxes?
If you believe your property was incorrectly assessed and the amount of taxes you are liable for is too high, you have a right to challenge the assessment to try and lower it. To do this, you will need to follow the procedures required in your jurisdiction, and prove that your property was incorrectly or disproportionately assessed. If there was a mistake in assessing the tax value of your home, or its value is considerably higher than similar homes in your area, you may be able to get it reduced to an amount you can afford to pay off.
It is also possible to compromise with the taxing authority to reduce or defer the taxes you owe. Although they may seem to be a faceless, heartless bureaucracy, your local government may negotiate with you if you can show that you've experienced hardship or other circumstances that have made it difficult to pay your property taxes. The taxing authority may give you more time and flexibility, or waive penalty fees if you show that you are committed to meeting your obligations. They don't want to get into the real estate business, they just want to collect the money they are owed for your taxes.
Loss of a job, medical problems, and unexpected expenses can cause responsible homeowners to fall behind on their mortgage and tax bills, but there is no way to avoid paying property taxes. Either you pay the taxing authority, or you pay the lender and they pay the taxing authority. If the taxes aren't paid, your property will be confiscated to pay the debt.
If you're unsure what to do when you fall behind on your property taxes or are facing foreclosure for any reason, it's best to consult with someone who can help you understand your rights and options. A qualified law firm with experience helping others in similar situations can help to defend you from foreclosure, achieve financial stability, and give you the best chance to keep your home.
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