If there are two things you can’t escape its death and taxes. This goes double for property taxes. Even if you’ve completely paid off your mortgage, you’re still going to have to pay a princely sum every year to your local government. These funds are then used – at least ideally – to help finance the costs of running the county or municipality in which you live. These funds can go towards any number of institutions, like public schools, utilities, or fire and police services. This makes collecting property taxes a fairly high priority for our local government. If you can’t pay these property taxes, you could be in for some serious trouble – deep enough to have your home taken away from you.
It Starts Out Slow but Steady
If you miss your due date on your property taxes, the first step that your government will take is to begin charging your tax account interest. While this will differ from state to state, you’re usually looking at a monthly accrual of interest. As if this wasn’t enough, your government may begin to apply penalties to your tax account as well, making your balance raise even higher than it would be with just the interest on it. Eventually, after enough time goes by or if the amount of tax owed reaches a certain threshold, you might end up being published in your local newspaper as a delinquent taxpayer.
Up on the Auction Block
Eventually, your county or municipality will tire of waiting for you to get your act together. What happens then is that your property will become scheduled for a tax deed sale, which is a process in which a third party investor bids at auction to buy your tax liability – and this provides them with the eventual ability to foreclose on your house if you are unable to clear your debt before a set redemption period. This period differs by type of property, but typically runs from six months to 2 years. If you do manage to property tax during this time, the owner of the tax deed doesn’t go empty-handed – they’re entitled to 25 percent of the amount they paid to purchase your tax liability in the first place.
What to Do in a Tax Sale Situation
It’s recommended to talk to an attorney as soon as possible if you’ve been the recipient of a tax deed sale. An experienced property tax lawyer can provide you with several different options that may be able to help, such as helping you file for bankruptcy. Doing so results in an automatic stay on the foreclosure process. Additionally, you can turn to a real estate company like Texas Ideal Properties that specializes in paying cash for a house on an “as-is” basis. Selling your house as-is can result in receiving at least something from the equity in your house, though you will still be responsible for paying any of your tax debt prior to the sale. With the money left over, you can start anew somewhere else – a big advantage over having the tax deed holder foreclosing on your house and leaving you with absolutely nothing.