Texas Property Tax Penalties

The power of compounding interest can have very positive impact on the growth and return from your family’s financial savings. Conversely, compounding penalties from unpaid property taxes can be devastating and potentially wipe the equity you have in your property.  We often encounter property owners who are forced to prioritize the payment of household bill, medical expenses and school tuition ahead of paying taxes.  When they get around to addressing the taxes they are shocked to learn that their property tax obligations have in some cases doubled in just a few short years.  The example below turns the page forward on that decision and gives a picture of the real financial implications.

Taxes                    Penalties     Interest       Court Cost

Year 1                    $5,000                   $2,200          $600

Year2                     $5,000                   $2,200          $1,200

Year3                     $5,000                 $2,200          $1,800             $900

*Total Payoff after  Year3 = $26,100 or  174% of original tax bills.

**Penalties, interest t and court cost base on typical Texas County

In just 3 short years, the interest, penalties, and court costs increased the original tax bill by 74%. It is sometimes easy to disregard property tax late notices and focus on other family priorities. However, as detailed in our example, the costs of not addressing your taxes when they are due can wipe out years of positive financial gains.

The message in all of this is that there is no reason not to pay your taxes prior to delinquency. If the funds are not available through savings, the next course of action should be to refinance your home or take out a home equity loan. If these solutions are not an option for you, a Texas Property Tax Loan is an option that you may want to consider.