The Consequences of Not Paying Property Taxes

by Steve Lander

When you own your own home, you have one responsibility that is almost impossible to avoid -- paying property taxes. Even if you pay off your mortgage, most communities require you to make your yearly payments. If you don't, they can do anything from charging you penalties and interest to actually taking your property and selling it at auction.

Additional Costs

Most communities start to levy penalties, interest or both on the property tax due or delinquency date. Taxes and interest vary from place to place. In Texas, the initial penalty is six percent for the first month, then one percent for each additional month up to 12 percent. If you stay delinquent for too long, you can be penalized up to 20 percent for attorney fees. California charges five percent for the first month, then adds 0.5 percent per month after that, up to a total penalty of 25 percent. Kentucky levies a 5 percent penalty when the property tax becomes past due and, one month later, increases that penalty to 21 percent.

Interest Due

In addition to penalties, some states also levy interest while your property taxes remain unpaid. In Texas, the interest accrues at 1 percent per month or fraction of a month while you owe the taxes. California has a floating rate that gets adjusted twice a year. Louisiana's rate for 2011, 2012 and 2013 is set at 0.5833 percent per month.

Property Foreclosure

If your taxes remain unpaid for too long, your local community can take your property. Property tax foreclosure actions vary depending on state law, but the general outline is the same. If you don't pay your taxes, either your property or the right to collect the taxes on it will be sold at auction. You typically get some extra time either before or after the sale to pay your property taxes off. If you can't pay the taxes you owe, you will either have your property sold to the auction buyer or sold to the tax lien holder.

Managing Your Taxes

To avoid penalties, pay your property taxes on time. Some states will even give you a discount if you pay them early. If you can't pay them on time, talk with your local tax collector. Many will let you work out an installment plan to pay your taxes off. Penalties and interest may mount, but if you're making your payments, you may be able to avoid having your property sold out from under you.

About the Author

Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.

Photo Credits

  • Comstock/Comstock/Getty Images