A Guide to Delinquent Property Tax Penalties in Texas
If you, as a homeowner or other property owner in Texas, have failed to pay your property tax bill by January 31, you will be subject to property tax penalties, additional interest, and fees that are collectively known as delinquent property taxes. Here’s a quick guide to how delinquent property taxes in Texas work and the best solution to minimize these penalties.
Understanding Delinquent Property Taxes in Texas
Delinquent property taxes occur when property owners fail to pay their property taxes by the January 31 deadline. Once the taxes become delinquent on February 1, they accrue penalties and interest, which increase the amount of taxes owed. This can quickly escalate the financial burden for property owners. A lien attaches to the property at the start of the tax year, granting the county tax assessor-collector the legal right to collect unpaid taxes.
The amount of delinquent taxes owed grows monthly due to penalties and interest on a delinquent tax, as outlined in the tax code. If the taxes remain unpaid, the county tax office may initiate legal proceedings, potentially leading to foreclosure or the sale of real property through a delinquent tax sale.
To avoid these consequences, property owners should contact their county tax assessor-collector’s office to discuss payment options. These may include paying taxes in installments or settling the debt before further penalties apply. Acting promptly can prevent the sale of the property and minimize long-term financial impacts.
Understanding the implications of delinquent taxes ensures that property owners can make informed decisions to protect their assets and avoid severe consequences.
Here’s a quick breakdown of the penalty timeline and legal risks you might face if property taxes remain unpaid:
What Are the Typical Penalties For Paying Property Taxes Late in Texas?
Penalties for late payment of property taxes differ depending on where your tax delinquent property is located. You will always incur an immediate penalty of 6% of your original tax bill on the first or second business day of February, a 1% additional penalty per month for each month it goes unpaid until June 30, and an additional 2% penalty on July 1. In addition to the above, you will also owe 1% per month in interest (or 12% per year) for as long as you remain behind on your property taxes. As a result, you incur 18% of your tax bill in property tax penalties and interest in just five months of nonpayment. But it gets much worse—the total cost of not paying your property taxes can escalate rapidly, especially once attorney and collection fees are added. Knowing the full breakdown of these costs can help property owners understand just how quickly a manageable debt becomes overwhelming.
In almost all locations on July 1, an additional collection and attorney fees cost will be added. This fee is equal to 20% of the total property tax bill, making for 41.6% in penalties, interest, and collection fees in the aforementioned five months of non-payment. Additionally, the 20% fee is added to the monthly 1% interest charges in the future, meaning your balance grows by 1.2% each month.
With tax rates and penalties so high in Texas, it’s easy for tax-delinquent properties to derail property owners’ financial stability. The rapidly increasing penalties and interest make paying the entire delinquent property tax bill even more challenging. For those struggling to pay their property taxes, it’s crucial to learn what to do if you can’t pay your property taxes in Texas and understand available solutions to address delinquent taxes effectively.
What Happens if I Don’t Pay My Delinquent Property Taxes in Texas?
Two things will happen if you leave your delinquent property taxes unpaid:
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Your bill will continue to accrue interest and penalties.
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Your taxing authority can start foreclosure proceedings on your tax-delinquent property. In Texas, the taxing authority places a tax lien on every property on January 1. The lien is lifted once the property taxes for the preceding tax year are paid. If the taxes go unpaid, the taxing authority may legally start foreclosure following the January 31 payment deadline. To avoid these severe consequences, it’s crucial to take action. Property tax loans can help you pay delinquent property taxes in Texas and find a solution to resolve your overdue taxes.
By law, the taxing authority has to notify you in writing that they are starting the foreclosure process against you. You will have limited time to either pay the unpaid property taxes at the tax collector’s office in full or present a valid defense in court to halt the foreclosure process. If you do not, the county will take a judgment against you, and your property will be sold in a tax sale to settle the total unpaid balance on the outstanding tax bill.
Late property tax payments in Texas can result in substantial penalties and interest, significantly increasing the overall cost to the property owner. When taxes that become delinquent are not promptly addressed, interest accrues monthly, compounding the financial burden. The taxing authority may send a notice of delinquency, and failure to pay could initiate foreclosure proceedings. To avoid losing the property, the owner must pay the delinquent taxes along with all accrued interest and associated costs. Failure to do so may ultimately result in the sale of the property to satisfy the debt.
If you’re concerned about losing your property due to unpaid taxes, Texas offers a legal safeguard known as the right of redemption. This allows homeowners to regain ownership even after a tax sale by paying off the owed balance within a specific timeframe. Understanding how to redeem property after tax sale can be essential for protecting your property rights if foreclosure becomes imminent.
How Do Texas Property Tax Liens Work?
In Texas, a lien is placed on your property as soon as your tax payment becomes due. If your taxes remain unpaid, your local tax assessor can foreclose your property to recoup the balance owed. However, homeowners have the right to pay off delinquent amounts to save their homes and clear the liens before a tax sale occurs. Once the bill is paid, the lien is automatically removed from the property.
A lien is a legal term for a claim or legal right against an asset (or assets) typically used as collateral to satisfy a debt. Liens can be placed voluntarily or involuntarily on an individual’s or organization’s assets to ensure that a particular debt gets paid. For property owners, a mortgage is an example of a voluntary lien, while a tax lien is an involuntary one.
In Texas, property tax bills are mailed to homeowners in October, and payment is due by January 31 of the following year. On January 1, the tax authorities will place a lien on all properties under their jurisdiction. Once payments are made, the liens are lifted. However, until the bill is settled, the tax authorities can levy penalties and interest and foreclose on properties when deemed necessary and appropriate. Your assessor is unlikely to foreclose on your property if you are one month overdue, but it will levy penalties against your account, making it more difficult for you to settle the bill.
As we have already seen, your bill increases substantially every month that it goes unpaid. With every passing month, it becomes less likely, from the assessor’s perspective, that you will be able to meet the obligation. If you could not pay the original amount, it is unlikely you will be able to pay the drastically increased balance months later. At this stage, you will have three viable options: settle the bill immediately, make a payment arrangement with your assessor (which may or may not be available and may be inflexible and bureaucratic), or apply for a property tax loan. If you do not take any of these options and allow your tax bill to keep accumulating interest, your tax assessor will ultimately have to foreclose on your property.
How to Pay Delinquent Property Taxes in Texas
Losing your home or becoming financially burdened due to a tax-delinquent property is devastating, economically and emotionally. Fortunately, there is a solution in the form of property tax loans, which can cover all the penalties, interest, and administration fees associated with your property tax bill and the original amount.
A tax loan is the easiest, fastest, and most affordable way to settle your overdue property tax bill. Upon approval, your property tax lender will immediately pay off your debt with the tax assessor, reducing your outstanding balance to zero and preventing further penalties or interest. The lien on your property will be transferred from the tax authority to the property tax lender. You can then repay the loan according to a plan and schedule that fits your budget and makes sense for you.
When looking for a property tax loan provider, it is essential that you speak to a company that is ethical, responsible, and licensed to assist you. This will ensure that you get compassionate, fair treatment and an affordable loan with no hidden catches or misleading information.
Get Help From a Property Tax Lender You Can Trust
American Finance & Investment Co., Inc. (AFIC) offers our clients an affordable, hassle-free way to manage their Texas property taxes and avoid crippling penalties and interest. We can ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you. AFIC can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:
- Quick and completely online process
- No money down
- No credit check
- Free 30-day rate match
- Match competitors and beat their rate by 1%
- Avoid high penalties and foreclosure
We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans, please contact our experienced team at AFIC today.
