It’s said that death and taxes are the only certainties in life. But only taxes are harder to deal with when life throws you a curveball. If you’re struggling financially — due to medical bills, personal debt, job loss, or anything else — property taxes might take a back seat. But what happens if you don’t pay property taxes?
If you don’t pay your property taxes, your local municipality will try to recover their money. They have a variety of tools for doing so. Depending on how long you’ve gone without paying property taxes, these consequences can include:
- Penalties (like a late fee)
- Accruing interest on your delinquent property taxes each month
- Tax liens being placed on your home
- Losing your home in a tax sale or tax deed foreclosure
If you’re behind on property taxes, know that you have options. You might be able to reduce the amount of taxes you need to pay or buy yourself the extra time to get caught up on what you owe.
Here, we’ll explore in more detail what happens if you don’t pay property taxes. Plus, we’ll tell you what you can do if you think your home is in jeopardy.
Why Do Property Taxes Matter?
Local governments levy property taxes on homeowners to finance municipal services. In most cases, property taxes are a municipality’s main form of revenue. They help pay for things like:
- Infrastructure maintenance
- First responders
Local governments, therefore, have a vested interest in collecting property taxes. They have a range of collection methods to ensure that you will pay your property taxes sooner or later. That includes the option to sell your home or have a tax lien against it.
What Is a Tax Lien or Deed?
A tax lien is one of the ways the government will try to collect unpaid property taxes. A lien essentially says that if you continue to miss your property tax payments, the local government can seize the taxed asset — your home.
A tax deed is similar to a lien. It essentially gives a local government a certificate of ownership over your property if you fall behind on your property taxes. This means they can sell it at auction.
The main difference is that a tax lien gives the government or lien-holder a right to the taxes, and a tax deed transfers the property’s title due to unpaid taxes. They can both lead to similar outcomes, such as losing your home.
What Happens if Someone Else Pays Your Property Taxes?
Your tax authority could choose to sell your home at auction in both tax lien and tax deed states. But in tax lien states, they could also choose to only sell the lien. In this case, someone purchases the lien against your home, essentially paying your property taxes.
However, this doesn’t mean that you’re free and clear. Rather, it means you now owe the new lien-holder, rather than the local government.
Can Someone Take Your Property by Paying the Taxes?
It’s possible for a person or business to take ownership of your home by paying the property taxes owed on it. Here’s how that works:
- You fail to pay your property taxes
- Your municipality places a lien against your home
- Your municipality then sells the lien
- The new lien holder unsuccessfully attempts to collect on the lien
- The lien holder files a petition to foreclose on your property and take ownership of it
In the case of a tax deed, a buyer would make a bid at an auction. If their bid is accepted, it will pay the property taxes and give them the deed to your property.
You May Be Able to Save Your Home from a Tax Sale
It sounds far-fetched that somebody could take your property just by paying the taxes, but it can happen. However, if your home is for sale at auction, don’t panic. While it’s nerve-wracking to consider this, remember that you may have a redemption period. During this time, you can pay the back taxes and cancel the sale of your home.
Redemption periods vary by state. Wisconsin, Michigan, and Ohio have no redemption period. Indiana offers homeowners a year to pay their back taxes, and Illinois offers up to three years.
What to Do If You Can’t Pay Your Property Taxes
If you’re behind on property taxes and worried about losing your home, you may have options. Let’s take a closer look at how you can get your property taxes back under control.
1. Request an Abatement
Depending on where you live, your tax authority may allow abatements. An abatement means that all parts of the property taxes will be forgiven, so you won’t be in danger of foreclosure or a tax sale. Remember that you’ll still need to prove that you have enough income to meet basic living expenses.
2. Enter a Payment Plan With Your Tax Authority
Nobody likes property tax foreclosures. Not you, not banks, and not local governments. Your local government’s goal is to receive the money they need to keep things functioning — not to make you lose your home.
To stay in your home, you may be able to enter a payment plan. This sets a schedule for making smaller payments over time until you’re current on your property taxes.
3. Connect With Social Programs
Your area may have programs designed to help homeowners who are financially struggling. Depending on where you live and your personal circumstances, you could be eligible for low-interest loans, grants, or payment deferral programs.
FAQs About Delinquent Property Taxes
If you’re behind on property taxes, you probably have questions. Here, we’ll answer additional common questions about property tax payments.
How Long Can You Be Delinquent on Property Taxes?
Unfortunately, there’s no single answer to this question. How long you can afford to be delinquent on property taxes depends on various factors, like how much you owe and where you live.
But remember, if your property tax payment is late, your tax authority will have the right to place a lien on your property or sell the tax deed. Don’t delay taking steps to paying any outstanding property taxes.
Can You Get a Home Equity Loan if You Owe Property Taxes?
Yes, you can get a home equity loan even if you have delinquent property taxes. If you have a stable income, equity in your home, and a credit score over 600, you may be able to get a home equity loan to cover your unpaid property taxes.
However, if your property taxes are delinquent because you’re struggling financially, your credit score may have taken a hit and lenders may be wary about lending to you.
Can’t Pay Your Property Taxes? SKYDAN Can Help
Nobody wants to fall behind on their property taxes. If you find yourself in that situation, the odds are that you have your fair share of financial burdens. If you’re facing costly medical bills, personal debt, or job loss, property tax may have taken the back seat. But it can’t be put off forever — especially if you intend to keep your home.
But this leaves you between a rock and a hard place. You have to pay your taxes, but you don’t have the money and may not qualify for loans that can help you cover the costs:
- If you have other loans to cover medical expenses, your debt-to-income ratio might be too high for lenders.
- If you have a lot of personal debt, lenders might be unwilling to work with you.
- If you’ve been laid off, you might not meet income requirements for certain types of financing.
So, what’s your best option for property tax lien relief? SKYDAN Equity Partners.
At SKYDAN, we help people in situations like yours every day. How can we do that? It all comes down to the key fact that we’re not a bank. That means that we don’t care about:
- Your credit score
- Your income
- Your debt
How SKYDAN’s Sale-Leaseback Program Works
If you have enough equity in your home, we can help you. Here’s how our unique alternative to home refinancing works:
- SKYDAN buys your house and gives you your equity in cash. But you don’t move out.
- Then, you lease your home back from us. We agree on an affordable rent for not more than two years.
- Rent is deferred to the end of the agreement, so you have no monthly payment.
- Finally, you can either purchase your home back for the original price plus deferred rent or sell the property at market value and receive all the additional equity.
We know. It sounds too good to be true. That’s what our customer Sally told us. But it’s not. SKYDAN is the “real deal,” as she put it. We’re not interested in making money by putting you in debt. We’re committed to helping homeowners like you take control of your life.
To get started with SKYDAN’s program, see if you qualify today.