The last thing homeowners want is to lose their home, which is, unfortunately, a consequence of not paying your property taxes. Knowing how to stop property tax foreclosure is a complicated process, and while it can be extremely challenging to deal with, we’ve created a guide to help you through it so you no longer need to feel helpless and confused.
If you’re concerned about being served with a notice of foreclosure due to delinquent property taxes, or you’re simply worried about falling behind on your property tax payments, we’ll be able to help you through it in this guide and give you reassurance throughout the situation.
Let’s start by looking into what property taxes really are…
What are Property Taxes?
All homeowners in the US need to pay a specific amount of property tax to their local government, which is calculated based on the property value of your home and a millage tax rate, which is imposed to arrive at the total tax payable amount. To assess the property value of your home, the government will appoint an assessor to value it officially.
Property taxes are useful as they are a major source of income for both local and state governments, and can be used to fund services such as education, parks, recreation, transportation, libraries and emergencies.
In any region, cities, counties and school districts have the power to levy taxes against the properties which lie within their boundaries. Each jurisdiction is calculated separately and then the levies are added to determine the total tax rate for an entire region. This is what’s known as the millage tax or the mill rate.
In the US, property taxes are among the highest in the country, so you may find yourself in a position where you cannot pay them at some point. Even if you’re careful, it’s always good to prepare yourself in case it does happen so you aren’t caught off guard.
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What happens when property taxes are delinquent?
In the event that you fall behind in your property tax payments, you may end up losing your home. This can be done by the taxing authority selling your home, most likely through the foreclosure process, in order to rectify the debt. Alternatively, the taxing authority could sell the tax lien that it holds, and the purchaser of this could be able to foreclose.
If you want to sell your property in the future, you’ll have to first pay off the lien, which acts as a notice that you owe a creditor money. Liens vary in priority, however a property tax tien takes precedence over all mortgages even if it were placed later than the mortgage. If these taxes are not paid, then the government has the right to sell your property in order to pay off the property taxes.
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Property Tax Foreclosure Process
In the event that the redemption period expires and all attempts to collect on your delinquent taxes are unsuccessful, the creditor which you owe can initiate judicial foreclosure against the property. A foreclosure auction will then be held by the court to collect the money in order to pay the tax lien, and the lien holder will usually end up acquiring the property.
How to Stop Property Tax Foreclosure
There are a few methods which you as a homeowner can employ to prevent a property tax foreclosure on your home, giving you peace of mind. The following methods are as follows:
Payback Owed taxes
You can always avoid property tax foreclosure by paying back your property tax, however if you aren’t in a position to pay it off all in one go, some tax collectors will give property owners the chance to set up repayment plans for their debts. While collectors are not required to provide this option, you can always ask and it can be an excellent solution for homeowners who can pay off their tax liability in one year or less.
However it’s important to mention that if the county has already initiated foreclosure proceedings, this option may not be available to you. Contact your tax assessor to see if there are any payment plans available for you.
Sell your home on the open market
If you’re behind on your taxes but have not yet received foreclosure notice or been given a lien on your property, you can always sell your property on the open market beforehand to pay off your taxes and avoid the consequences. Keep in mind that if you sell via a real estate agent you will have to pay commission fees and pay for any repairs your home may require, whereas if you sell For Sale By Owner, then you don’t have commission fees to pay but you also lack the expertise of a real estate agent.
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Methods to help you if you are behind on your property taxes
If you’re already behind in your payments and need a little extra help, there are a number of ways to get assistance with your property tax before it gets to foreclosure:
Seek Tax Abatement
A tax abatement is a reduction in, or exemption or, the level or amount of tax faced by an individual – in this context, it would mean a reduction or exemption to property tax. There’s a chance you may qualify for this if you have low or limited income and one of the following at the time you were charged with the property taxes:
- You could not work due to a disability
- You were a widow or widower of someone getting an exemption and you were at least 57 years old in the year your spouse died
- You were a veteran with a disability received during military service
- You were the spouse of a veteran who died or was disabled from military service
- You were at least 61 years old during the calendar year (Jan – Dec)
This may end up lowering the cost of your property taxes overall as well as lower the payments that you owe.
Apply for a Loan
Applying for a loan to repay your property tax is a good option to consider, especially if the loan repayments are spread out further. This can help prevent the foreclosure process being initiated from your unpaid tax and though you will still owe money, you can pay it back to the loan company or bank on a payment plan that suits you best.
Consider a Payment plan
As mentioned earlier, it’s entirely possible that you tax collector has payment plans available for your unpaid property tax, however it isn’t a legal right to inform you of them so you may have to inquire about it. A payment plan can help stave off the foreclosure notice and the danger of losing your home, however if the county has already begun their foreclosure process then you may be unable to use a payment plan. Your best option is to ask your tax assessor and review your options with them.
Look into a hardship plan
There are times when you can experience financial hardship, and if the hardship is beyond your control at this point, you may be able to get some relief by writing to a relevant government agency to ask for relief on your property taxes. While this means that your debt will likely be deferred if you can prove your hardships, sometimes a little time is all you’ll need to repay your property tax.
Reasons which are accepted for property tax deferral include:
- Death in the family
- Sudden illness or disability
- Failed business
- Activated military personnel
- Separation or divorce
It’s important to mention that some of these may differ depending on the state. In addition, certain demographics can be offered hardship plans and deferrals by the government if they are classed as any of the following:
- Widows and widowers of military veterans with low income
- People over the age of 60
- Long-term occupants
- A natural disaster affecting the entire geographical area
- People who are forced into early retirement due to disability
- People who run a nonprofit organisation but still must pay state taxes.
- People who have owned their property for at least 5 years
- Veterans returning from active duty.
While the steps to property tax foreclosure can be complicated and confusing, with this guide on hand you can easily get through this before you risk losing your home. Whether you’re on top of your issues with property tax or you’re getting to the point where you need to consider assistance with your repayments, you can breathe a sigh of relief and go through your options carefully, considering your situation and seeing which of our many suggestions apply to your situation.
If it comes to it, you can always contact us for more advice on selling your home to us for cash if you need the help!