Unpaid Property Taxes: What Happens and What You Can Do

June 12, 2017 | By: Matt Robinson

unpaid property taxesOwing property taxes is scary. Worst case scenario—if you don’t pay the taxes, or you end up with unpaid property taxes for a long period of time, you lose your home. Luckily, there are a lot of options before that happens.

What If You Can’t Pay Unpaid Property Taxes?

If you don’t have enough money to pay your property taxes, the options vary based on where you live. However, most taxing authorities offer payment plans for unpaid property taxes. That’s where you pay the property tax in installments or monthly payments. 

There are also abatement and exemption programs. That’s when the taxing authority agrees to reduce your property tax based on your age, income, or personal status. Many areas also offer property tax reductions to veterans or people with disabilities. In some cases, you can also apply for a deferral and just pay your property tax later.

How Do You Apply for a Property Tax Deferral?

You can find information on property tax deferrals on the department of revenue website for your state. Typically, you need to submit an application to the department of revenue or to the tax assessor in your county.

There are different rules for deferrals in different areas. For example, Washington state offers property tax deferrals to homeowners who are over 60 or who have a disability, based on their income and the value of their home.

What If Your Property Taxes Are Too High?

Your property taxes are based on the value of your home. That value is based on information from the county tax assessor’s office. If you disagree with the valuation of your home, you have the right to appeal.

Every area has a different process for the appeal, but you should be prepared to illustrate why your home’s value is lower than assessed. If you are appealing your assessment, you are still required to pay your property taxes. You will receive a refund if your appeal is accepted.

What If You Don’t Pay Your Property Taxes?

If you refuse to pay your property taxes, a few different things can happen. Generally, in the first weeks or months of having unpaid property taxes, you will incur additional penalties and interest. Eventually, the taxing authority can put a lien on the house. Then, the taxing authority can take ownership of your home based on that lien. 

In some cases, taxing authorities sell the lien to a third party. In most areas, you can keep the home if you pay the tax owed plus interest and penalties to the lienholder within a certain period of time.  Otherwise, the lien holder can take possession of the home.

If there is a mortgage on the property, the mortgage lender may pay the property tax. Then, the bank may attempt to reclaim the property tax from you. If you don’t pay, the bank has the right to foreclose.

What Should You Do If You Can’t Pay Your Property Tax?

If you can’t pay your property tax, contact your county assessor or department of revenue for information about deferrals, exemptions, or payment plans. Tax rates vary by town, city, and county, and therefore it is best that you find out more about your specific city’s options when you are dealing with unpaid property taxes. An accountant or a licensed local tax professional can also be a good fit for property tax, income tax, and unpaid taxes.