It’s one of the powers of the state or local government to impose real estate property taxes on the people living within its jurisdiction. Of course, taxes are necessary to finance the services that the local government provides to its citizens. Real estate property taxes enable the government to pay for services such as public education, utility, police, and fire services.
That’s the reason why your local government is serious in collecting taxes from property owners. In fact, most local governments don’t spare property tax shirkers. They put in place powerful collection tools and sanctions to make sure that homeowners paid their dues in owning a real estate property.
To avoid getting those sanctions from your local government, it’s crucial that you know the consequences if you fail to pay your property taxes. This blog article will be a huge help for that purpose. So take a read!
Your Property Taxes Will Incur Interest
Not paying your real estate property taxes on time will prompt the local taxing authority to levy interest on your tax account. Typically, the interest on overdue property taxes increases every month.
It’s also possible that local taxing authorities will charge monetary penalties on you. These penalties could mean an increase in the total balance that you have to pay to the local government.
A Tax Lien Will Be Placed on Your Property
In the case that you fall behind on the payment of your real estate property taxes, the local government can attach a lien on the property. If your property has a tax lien placed on it, the city or state you’re living in can’t allow you to sell or refinance your property until you’ve paid all your tax obligations.
Only the local government has the authority to sell the property tax liens. In fact, last year, the National Tax Lien Association (NTLA) said that almost a third of the $14 billion unpaid property taxes are sold as tax deed sales or tax lien certificate sales to private investors.
Tax deed sale means that the taxing authority puts the property on sale, and the buyer gets the property deed. In tax lien certificate sale, on the other hand, the government has the right to sell the tax lien, allowing the buyer to collect the debt with its interest and penalties.
However, in some jurisdictions, the taxing authority doesn’t sell your property outright. It just attaches a lien on the property and takes the title. Local property law then stipulates a procedure for the tax bureau to sell the home.
Placing tax lien on properties brings a considerable advantage to local governments because they quickly recover the money owed on the property.
What You Need to Do
If ever you receive a notice of a tax sale because of overdue or unpaid property taxes, you should make sure that you call a lawyer as soon as possible. However, your options will depend on the city or state where you’re living.
For instance, there are tax authorities that enable a tax delinquent property owner to request for a decrease of the tax amount on grounds such as financial hardship. Of course, you need to prove that you’re indeed in that unfortunate situation.
Another option is to request that you pay the property tax you owe to the government in installments within a timeframe.
Paying your taxes is essential if you’re a property owner. Otherwise, the taxing authority can increase the interest of your overdue tax obligations or place a tax lien on your property. For you to avoid this situation, it’s crucial that you know about property taxes. You can read blog sites like SoCal Home Buyers to look for knowledge on this subject.