Governments impose property taxes on homeowners to finance county and municipal costs. Property taxes pay for police and fire personnel. They help fund public schools and utility services. Your municipal or county government has a big stake in collecting homeowners' taxes so it can meet its budget. If you can't pay your taxes, the government will come after you. You may lose your home.
Interest and Penalties Will Accrue
If you can't pay your property taxes at the time they're due, your government will start charging interest on your tax account. Interest typically accrues monthly. You may also incur penalties. Therefore, the total balance you owe to your municipality or county will begin to steadily increase. At some point, your government may publish notice of your delinquent taxes in your local newspaper.
You Could Lose Your Property in a Tax Sale
If you continue to be unable to pay your taxes over a period of time, your county or municipal government will schedule your property for a tax sale. In a tax sale, someone else, usually an investor, pays the taxes on your behalf. You now owe the investor, not your government. If you don't pay, the investor can file a petition with the court to foreclose on your property and take ownership of it. You usually have a period of years before this last step occurs, but as this happens more property taxes continue to accrue.
You Have Options
If you fall so far behind on your property taxes that you receive notice of a tax sale, speak with an attorney as soon as possible. Some governments allow you to request an abatement of your taxes due to hardship. When your county or municipality abates your taxes, you don't owe them anymore, and you're in no danger of a tax sale or foreclosure. However, you have to prove your case, which usually involves convincing your government that you have only enough income to meet your basic living expenses. If you have a lot of unnecessary expenses in your budget, or if you have a great deal of equity in your home and could sell it, your government may deny your request for an abatement.
Your Lender May Help
If an investor buys a tax lien against your property, then forecloses on it, this can complicate things considerably for your mortgage lender. Some lenders will buy the tax lien for this reason, rather than allow it to go to a third party. This doesn't get you off the hook, however. Your lender will add the taxes to your mortgage balance. If you can't make the payments, your lender might foreclose on your property.
A Tax Lawyer Can Help
The law surrounding failure to pay your property taxes is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a tax lawyer.
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