What are the Consequences of Not Paying Your Property Taxes?

Anyone who owns a piece of property must pay property taxes. Unfortunately, this is a requirement created by the government, and the consequences of not paying property taxes can be quite harsh. A property tax is simply a tax liability that all property owners must pay.

In most cases, property tax is levied at either a city or county level. The revenue from property taxes is normally used for public services. Recreational programs, law enforcement and public schooling all receive funding from property taxes.

Although most property owners don’t like property taxes, they’re required to fund these various programs and services. Foreclosure, property liens, interest and fines are all potential consequences of not paying property taxes.

Garnished Wages

One of the consequences of not paying property tax is garnishment. Municipalities are capable of using garnishment to obtain tax money. If someone owes overdue property taxes, a governing tax authority has the power to garnish the individual’s employment wages. Other assets like checking or savings accounts can also be garnished.

Harsh Penalties

People who do not pay overdue property taxes are subject to penalties. A property owner who hasn’t paid their overdue property taxes could face harsh penalties that will only increase their owed balance. A penalty is normally a percentage of the owed balance, and a penalty can also be added on top of interest.

High Interest

One of the top reasons why people cannot pay their bills is because the interest accumulates. When overdue property taxes are not paid, interest charges can be added to the balance. In most cases, the interest will continue to accumulate every month, and it will continue to accumulate until the owed balance is paid in full.

Tax Liens

Another potential consequence of not paying overdue property tax is a tax lien. A governing tax authority has the power to levy what is called a tax lien against the property owner’s home. A tax lien will supersede any existing mortgage.

For example, if the property owner were to sell their home, the proceeds would be diverted to pay the overdue property tax. A tax lien will also prevent a person from refinancing their mortgage. If overdue property taxes continue to go unpaid, a person’s home could actually be seized and sold at auction.

Foreclosure

One of the worst consequences of not paying overdue property tax is foreclosure. Once property taxes become overdue, a tax authority will notify a person’s mortgage lender. The lender can choose to pay overdue property taxes, and they will pass the cost to the property owner. If the property owner doesn’t pay the lender back for the property taxes that the lender paid, then the lender can foreclose on a home, and the lender will end up selling it at auction.

A property owner in this situation could end up with no home, and they might even owe their lender money. Since you now understand the importance of paying property taxes, whether with a property tax loan or other method, give us a call today; we can help.