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.
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.
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.
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.
- Susan Combs, Texas Comptroller: Delinquency Dates, Penalty and Interest by Type of Property Tax Bill
- State of California Franchise Tax Board: If I Pay My Taxes Late, What Interest and Penalties Will I Be Charged?
- Kentucky Department of Revenue: Overview of the Tax Calendar
- Louisiana Department of Revenue: Interest Rate Schedule Collected on Unpaid Taxes
- City and County of Denver: Information on the Public Auction of Delinquent Real Property Tax Liens
- Clark County Washington: Property Tax Foreclosure Information
- Pinellas County Tax Collector: There Are Discounts for Paying Your Property Taxes Early
- Comstock/Comstock/Getty Images