Property taxes are a given when you own your property. Some homeowners choose to roll the taxes into their mortgage payment and let the lienholder pay when they are due. However, some prefer to pay it themselves.
Here is what may happen if you do not pay your property taxes.
WHAT IS “PROPERTY TAX,” AND HOW IS IT CALCULATED?
Property tax is calculated by taking the local tax rate and multiplying it by the home’s assessed value. While there are tax breaks from owning a home (thanks to the property tax you pay), there are limits. Essentially, if there is a higher assessed value, there will be less beneficial to your tax credit. But whether or not you get the maximum benefit from paying property taxes, it’s still a requirement.
WHAT HAPPENS WHEN YOU DON’T PAY YOUR PROPERTY TAXES?
Homeowners could run into financial trouble if they did not plan for their property taxes. Coming up with $2,000-3,000 last minute is difficult but possible. However, coming up with $7,000-$10,000 at the last moment may prove to nearly impossible, and that could lead to some serious trouble.
If you are unable to pay the property taxes, you could lose your home. This is possible because the local tax authority can put a lien on your home and force a sale, just like a foreclosed home.
Fortunately, situations as dire as those don’t happen overnight. Usually, your local taxing authority will first charge interest on the unpaid taxes, giving you a short timeframe to catch up.
You might be able to avoid this altogether by applying for property tax relief where you pay in installments rather than in a lump sum.
WHAT TO DO IF YOU CAN’T AFFORD YOUR PROPERTY TAXES
If you can’t afford to pay because your property taxes have gotten too high, look into appealing it.
The process varies from state to state and involves you proving that the home’s assessed value is has been calculated too high. The rate, however, cannot be negotiated.
You can try to prove that it’s been assessed too high by presenting comparable sales in the neighborhood. You can also argue the number down if you discover that the tax assessor has inaccurate details about your home.
Our mortgage office is all about transparency and helping you to make smart financial decisions. Do you have more questions about how much home you can truly afford? Contact us today to get honest and clear answers!
