I Can’t Pay My Property Taxes! What Do I Do?
If you are a Texas homeowner that’s struggling to pay your property taxes, you’re not alone. Whether the deadline is approaching or has already passed, it’s important to understand your options and take action before penalties and legal consequences escalate. In this guide, the experts at American Finance & Investment Company, Inc. (AFIC), a leading provider of property tax loans in Texas, provide much needed information that you should know to protect your property and regain control of your finances.
Understanding the Consequences of Failing to Pay Property Taxes
When your Texas property taxes go unpaid, the consequences can escalate quickly. What may begin as a missed payment can lead to mounting penalties, interest charges, and eventually, legal action. The longer the debt goes unresolved, the more difficult it becomes to manage and the riskier it gets.
If you have delinquent property taxes, the taxing authority may begin the property tax foreclosure process. This could result in the property being sold at a tax sale to recover the debt. In some cases, homeowners may have a limited redemption period to pay the balance and reclaim ownership. However, missing this deadline could mean losing the property permanently.
Some Texas counties offer property tax relief programs, such as deferrals or abatements for eligible groups like senior citizens, veterans, or disabled owners. These options can temporarily delay or reduce property tax payments. To see if you qualify, contact your local county tax collector’s office.
Acting quickly is critical to avoid further financial hardship or foreclosure. Paying the delinquent taxes or working out a payment plan can help protect your home and resolve the debt effectively.
What Is a Property Tax Lien and How Does It Affect You?
If you don’t pay your property taxes, the county tax collector will utilize a statutory lien that is created annually for property taxes secured by your home, other property, or commercial property. This legal claim gives the county first rights to the property and blocks you from refinancing or selling until the taxes are paid in full.
If the delinquent taxes remain unpaid, the county may file a lawsuit against you and ultimately foreclose upon your property to recover the tax amount, interest, and back fees.
To keep your home or property, you’ll need to redeem the property by paying the full delinquent amount, including penalties plus a surcharge of 25 or 50% on the foreclosure sale amount plus any maintenance and operating costs paid by the new owner. The longer you wait, the more expensive it becomes to stop the tax sale process.
Sometimes, a mortgage lender will pay your taxes to protect their interest, but this increases your loan balance or escrow payments. If you’re behind on your property taxes, relief options may include:
- Payment plans from your local tax office
- Property tax loans to cover the full amount and avoid foreclosure
To explore your options, contact your tax collector as soon as possible, especially before the county moves to sell your home, other property, or commercial property through a tax sale.
How Long Do You Have to Reclaim Your Property After a Tax Sale in Texas?
Under Texas Tax Code §34.21, you may still reclaim your property after a tax sale through what’s called the right of redemption:
- 2 years for homesteads, agriculture, or mineral properties
- 6 months for non-homestead residential and commercial properties
To redeem the property, you must repay the entire tax debt, plus legal fees and interest. Additionally, to redeem the property, you will need to pay either a 25 or 50% surcharge of the foreclosure sale price. This is your final window to prevent permanent loss of your property. So, act fast if foreclosure has already occurred.
Legal Help for Tax Foreclosure and Delinquent Tax Debt
When facing tax foreclosure or struggling with delinquent property taxes, seeking legal help can provide essential guidance and protection. A property tax lien, a legal claim placed on your property due to unpaid taxes, can escalate to foreclosure if the taxes are not paid. Addressing this promptly is crucial to avoid foreclosure on your home.
An attorney specializing in property tax law can assist with negotiating payment plans, applying for property tax abatement, or exploring eligibility for programs designed for homeowners who fail to pay due to financial hardship. This is particularly valuable for those who can’t afford to pay the full amount immediately but want to prevent foreclosure or further penalties.
In some cases, a mortgage lender might pay the delinquent taxes to protect their financial interest, but this typically increases your loan balance. Legal professionals can help clarify the implications of such actions and suggest alternatives tailored to your situation.
If you are already delinquent in your tax payments, taking immediate action with legal guidance can help protect your property, resolve your tax delinquency, and ensure your rights are upheld throughout the process.
Option One: Pay Off Your Property Taxes After the Due Date
While Texas does allow late property tax payments, the penalties can add up very quickly. Beginning February 1, counties apply a 6% penalty and 1% interest to the unpaid balance, followed by additional charges each month. By July, you could owe more than 40% above your original bill, especially if attorney fees are added. Understanding the timeline can help you take action before the costs spiral out of control.
Penalty Timeline in Most Texas Counties
- February 1: 6% penalty + 1% interest
- March-June: Additional 1% penalty + 1% interest monthly
- July 1: 2% penalty + up to 20% in collection fees (for attorney and court costs, as allowed under Texas Tax Code § 33.07)
- Total by July: About 41.6% added to the original tax bill
- Ongoing: 1% interest monthly until the debt is paid
As you can see, the longer your taxes go unpaid, the more the penalties and interest add up, potentially exceeding 47% within the first year.
Option Two: A Tax Deferral
Under certain circumstances and subject to current state legislation, you may be able to apply for tax deferral. It’s best to check directly with your local tax office to see if you qualify. But, generally, they only apply to residents who are 65 and older, have qualifying disabilities, or qualify as a veteran. This doesn’t mean you won’t have to pay your property taxes, but it will mean that late penalties are halted, interest is kept to a minimum, and the county cannot foreclose on your home until after you move or pass away.
Per Texas Tax Code §33.06, you must apply for a deferral before the property becomes delinquent, typically no later than January 31. Contact your local appraisal district for application forms and deadlines.
Option Three: A Payment Plan from Your Tax Office
Texas law requires tax offices to offer installment agreements to homeowners with a homestead exemption. Non-homestead property owners may also request payment plans, though availability depends on local policies.
Plan terms and eligibility vary by county and taxing unit. For example, Harris County usually requires plans to be established before February 1 to avoid those penalties, while Travis and Bexar counties have different deadlines or fewer plan options available.
To confirm what’s available in your area, contact your local tax office directly. Eligibility requirements, deadlines, and payment terms can differ across Texas counties.
Option Four: Apply for a Property Tax Loan in Texas
If you’re behind on your property taxes, whether residential or commercial, a property tax loan could offer a practical solution. These types of loans cover the full delinquent amount, including penalties and interest, so you can repay the balance over time without facing foreclosure.
Licensed lenders like AFIC work under Texas Tax Code §32.06, which allows third parties to pay your tax bill in exchange for a lien assignment. You retain ownership of your property, and the loan is not typically reported to the credit bureaus, nor do property tax lenders check credit or require a good credit score.
For some lenders, there is no application. Simply a little bit of information to provide. Once the loan is closed, the lender pays your taxes directly to the county.
Tips for Managing Future Property Tax Bills
Planning ahead for your Texas property tax payments can help prevent financial hardship, penalties, and tax liens. Here are key strategies to stay on top of your property tax obligations:
Review Your Property Assessment Annually
Your property tax bill is based on the property’s value as assessed on January 1 of the tax year. If you believe the assessed value is too high, you can file an appeal with your county tax assessor-collector. A successful appeal can lower your tax burden and reduce the amount of property taxes owed.
Explore Property Tax Exemptions
Under Texas law, certain homeowners may qualify for property tax exemptions, which can lower their taxable property value and reduce their property tax payment. Common exemptions include:
- Residence homestead exemption for primary homeowners.
- 65 or older or disabled exemption to provide tax relief for eligible homeowners.
- Veteran exemptions for qualifying service members and surviving spouses.
To determine your eligibility and submit the required applications, check with your local appraisal district before the deadline.
Plan and Budget for Your Property Tax Payments
Since tax bills are due on January 1 and become delinquent after February 1, it’s crucial to set aside funds throughout the calendar year to cover your tax amount on time. Consider:
- Setting up a designated savings account for property taxes in Texas.
- Enrolling in an installment plan if offered by your local tax office.
- Monitoring changes in property tax rates and exemptions each year.
Stay Informed on Texas Property Tax Laws and Relief Programs
The Texas tax code provides several options for homeowners struggling with delinquent taxes. To avoid penalties and foreclosure, explore:
- Payment plans through your local tax assessor’s office.
- Deferral programs for those 65 or older or disabled.
- Property tax loans as an alternative if other options aren’t available.
By planning ahead, staying informed, and exploring available tax relief options, you can effectively manage your property tax obligations and avoid financial strain. Homeowners who qualify for a property tax deferral may not be eligible for our services.
Apply Instantly for a Texas Property Tax Loan with AFIC
AFIC is a fourth-generation, family-owned property tax loan provider in Texas that offers homeowners and other property owners quick, convenient assistance in paying their property taxes. We can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:
- Quick and completely online process
- No money down
- No credit check
- Free 30-day rate match
- Match competitors and beat their rate by 1%
- Avoid high penalties and foreclosure
We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans, please contact our experienced team at AFIC today.
