How Much Do I Really Pay in Penalties & Interest if I Don't Pay My Property Taxes?
Most Texas property owners know they face some of the highest property taxes in the country. However, the tax rates themselves pale in comparison to the bill you will have to deal with if your property taxes become delinquent. Aside from being penalized for your failure to pay, you will also be charged interest and legal collection costs on the outstanding amount for as long as the bill remains unpaid. These charges can quickly grow into unmanageable debt.
Penalties on Delinquent Property Taxes
Failing to pay your property taxes on time results in three types of charges:
- Penalties: Additional charges imposed based on the unpaid balance.
- Interest: Accrues monthly on the outstanding tax amount.
- Legal Collection Costs: Fees are typically added when the tax remains as of July 1 of the year in which the taxes are due.
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Breakdown of Penalties and Interest
Once your property taxes become delinquent, the amount you owe doesn’t stay static—interest and penalties begin accruing immediately and continue to increase the longer the balance goes unpaid.
Penalty charges increase over time as follows:
- A 6% penalty is applied if unpaid by February 1.
- For each month that your bill goes unpaid after February 1, an additional 1% penalty will be added.
- By July, the total penalty (interest + original penalty) will be 18%.
- Additionally, a 24% collection fee can be added if still unpaid by July 1.
Legal collection costs can vary by jurisdiction, but typically:
- If your taxes are still unpaid by July 1, the county or their designated attorneys will charge up to 12% in penalties, unlimited interest, and a collection legal fee of 20% of the entire balance owed. At this point, your total penalties and legal fees can reach up to 41.6% of your original tax bill.
- After July, the 20% fee is added to the monthly 1% interest charges in the future, meaning your balance grows by 1.2% each month.
- Overall, collection fees, penalties, and interest on unpaid property taxes can accrue to 48% of your original tax bill in just the first year.
These escalating fees make timely tax payments critical. What starts as an overdue bill can rapidly become a massive financial burden.
How Tax Liens Put Your Texas Property at Risk
Unpaid property taxes can result in a tax lien, which is a legal claim placed on a property by the county tax office. A tax lien restricts a homeowner’s ability to refinance or sell the property, as it must be cleared before any transaction can take place.
Additionally, tax liens are public records, which means they can negatively impact a homeowner’s credit profile. This can lead to higher interest rates on loans or difficulty obtaining new credit.
If delinquent taxes remain unpaid, the lien can escalate into foreclosure proceedings. Counties in Texas have the legal right to sell the property at auction to recover the owed taxes. Foreclosure can begin as soon as 60 days after the county sends a formal notice of delinquency, making it imperative for homeowners to take action before legal measures are enforced.
Can You Lose Your Home Over Delinquent Property Taxes?
In Texas, foreclosure proceedings can begin just 60 days after a notice of delinquency if property taxes remain unpaid. Once foreclosure begins, homeowners are required to pay the entire overdue amount, including penalties, interest, and legal fees. If any part of the debt remains unpaid, the property may be seized and auctioned to recover the outstanding taxes.
To prevent foreclosure, homeowners should act quickly by:
- Contacting the county tax office to discuss payment options.
- Seeking assistance from tax professionals or legal advisors.
- Applying for a property tax loan to immediately settle the debt and stop foreclosure proceedings.
Avoiding foreclosure requires swift action. The longer the taxes remain unpaid, the greater the financial risk.
Paying Your Property Taxes on Time is Crucial
Texas property taxes are already high—penalties can quickly push your debt out of control. If the delinquent tax remains unpaid, you may face:
- Tax liens placed on your property.
- Legal action and additional attorney fees.
- Tax foreclosure, which could lead to the loss of your property.
To avoid excessive penalties, consider a Texas property tax loan, which allows you to pay off your tax debt immediately to stop penalties from accumulating, repay the loan in manageable installments tailored to your budget, and protect your property from foreclosure or tax liens.
Texas property tax rates are high enough as they are. These additional costs can make property owners’ tax bills soar out of control in a very short period. Therefore, it is a much better option to make arrangements to pay your taxes as soon as possible. If you don’t have the cash to cover your bill, a Texas property tax loan can help. It pays off your tax debt immediately and lets you repay over time in affordable installments.
Get Support From AFIC
American Finance & Investment Co., Inc. (AFIC) offers our clients an affordable, hassle-free way to manage their Texas property taxes and avoid crippling penalties and interest. We can ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you.
AFIC 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 that 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.
