How Long Can You Be Delinquent on Your Property Taxes in Texas?
If you own a property in Texas, you have likely felt the weight of annual property taxes. Texas property taxes are known to be high and unavoidable when owning property in the Lone Star State.
Many Texas homeowners find it challenging to pay their property taxes on time and in full – leading to delinquency, whether for financial, personal, professional, or other reasons. But how long can you be delinquent on your property taxes in Texas? What happens if you don’t pay? Can you lose your house or property if you don’t pay your property taxes? We will answer these questions in this blog.
What is Meant By Delinquency of Property Taxes?
Delinquent taxes are defined as the cumulative amount of unpaid taxes, assessments, recoupment charges, penalties, and interest charged against a property. A tax-delinquent property is any property on which the taxes levied and assessed remain unpaid, in whole or in part, by the due date. In short, delinquent property taxes include all unpaid property taxes, penalties, interest, or fees that have accumulated and remain outstanding after the due date.
When Are Property Taxes Considered Delinquent?
Texas property tax bills are mailed out in October every year, and payment is due upon receipt. However, at the absolute latest, property owners have until January 31 of the following year to settle their tax bills in full before they are considered delinquent. February 1 is regarded as the delinquency date, meaning that any properties with unpaid taxes from this date are considered delinquent until the balance due is settled.
What Happens if You Do Not Pay Your Property Taxes?
Local governments in Texas rely heavily on property tax revenue. Therefore, the ramifications for delinquency are severe:
Penalties and Interest for Unpaid Property Taxes: On the first business day in February and a penalty charge of 6% of the original tax amount, as well as a 1% interest charge, will be added to all delinquent property tax bills. For every month that the property taxes remain delinquent thereafter, an additional 2% will be added(1% in penalties and 1% in interest) to the bill before the biggest penalty of the year is added in July. The July 1 penalty is 2% in penalties, 1% in interest, and a 20% surcharge of the total balance for collection costs. After that, penalties and interest will continue to accrue, typically at 1.2% per month, until the delinquent property tax bill is settled in full. It is recommended to investigate the exact amount of penalties and interest you will be subject to in order to fully grasp the seriousness of delinquency.
Tax Lien Foreclosure: Another significant repercussion of not paying your property taxes is foreclosure. In accordance with Chapter 32 of the Texas Property Tax Code, on January 1 of every year, a tax lien is attached to every property with outstanding taxes in order to secure payment. Any properties with outstanding property taxes after the delinquency date are, therefore, vulnerable to foreclosure through a tax sale. If you don’t pay off the overdue amounts or have a valid defense against the foreclosure, the court will enter a judgment against you. The county will then enforce that judgment by selling your property at auction. A home that does not sell at the tax sale will be “struck-off” to the county, meaning that the county will own it and attempt to sell it at a later date.
Penalty and Interest Charges on Delinquent Property Taxes
When property taxes remain unpaid, Texas imposes escalating penalty and interest charges that can quickly add up. Starting in February, a 6% penalty is applied to the original tax amount, alongside a 1% interest charge. Each subsequent month, the interest increases by an additional 1%, further compounding the debt. By July, a significant 20% collection fee is added to cover the costs incurred by taxing units in pursuing delinquent taxes. This means that the longer you delay payment, the more the amount owed increases.
The total tax liability can grow substantially, making it harder to settle the debt as time passes. These penalties and interest are not only a financial burden but can also put the property at risk. As the amount owed increases, the likelihood of foreclosure grows, and the property’s market value may suffer.
To avoid the escalating financial strain, it’s essential to act quickly. Property owners who are struggling to pay their delinquent taxes should contact the county tax office for a detailed breakdown of the delinquent taxes owed. Exploring options such as payment plans or property tax loans can help mitigate the impact of these fees. Early action can help prevent foreclosure and reduce the financial burden of mounting penalties.
How Long Can You Go Without Paying Your Property Taxes Before Foreclosure?
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A taxing authority can initiate foreclosure proceedings any time after your taxes become delinquent (Texas Tax Code § 33.41). However, the exact timing of when tax authorities will begin these proceedings is uncertain. Neither the state nor the counties have established definitive repayment deadlines for property taxes. The decision to start foreclosure proceedings is left to individual school districts and other tax authorities, and these decisions are typically made on a case-by-case basis.
This means a delinquent tax bill could continue to accrue interest and penalties for months without action, or foreclosure proceedings could begin as early as one month after the due date. Predicting which scenario will apply is difficult. Therefore, the safest course of action is to address any tax delinquency as soon as possible.
The important thing to remember is that the tax lien is in place automatically from January 1. It will remain in effect until the property tax bill has been paid. The lien enables the tax assessor to foreclose on a property at any time if payment is not forthcoming. In most cases, the tax assessor will not immediately resort to foreclosure, but the longer payment is delayed, the more likely it is that the authorities will take that action.
Another important point, as we have already noted, is that the amount you have to pay will increase dramatically the longer you leave the bill unpaid. From the tax assessor’s position, if you were not willing or able to pay your bill before penalties and interest started to accrue, they would have little reason to believe that you could settle the escalating amount. Foreclosure thus becomes increasingly likely as time passes and the balance you owe starts to balloon.
Once the tax assessor decides to pursue foreclosure, you will be given a written notice of the sale. A Notice of Tax Sale must be delivered before a tax sale and is typically delivered personally or in the mail. It will include the sale date, time, and location of the sale in accordance with Chapter 34 of the Texas Property Tax Code. The notice is also published in a newspaper or posted publicly if there is no newspaper in your county.
While property owners can redeem their properties at any time up to two years after the deed is filed in county records, no property owner wants to go through the hassle of foreclosure. By paying off the judgment before the sale, you can cure the delinquency and stop the tax foreclosure. Clearing your delinquency will release the tax lien from your property and stop the foreclosure process, as outlined in the Texas Tax Code (§ 33.53.)
What Can You Do to Avoid Foreclosure?
No one wants to face foreclosure proceedings and the loss of their home, but if you are delinquent on your property taxes, there are a few ways you can combat the foreclosure process.
Settle Your Property Tax Bill and Any Accumulated Penalties
As Occam’s Razor states, the simplest solution is almost always the best. The simplest solution to stopping foreclosure and ending delinquency is to pay your property tax burden. Settling your delinquent balance will remove the lien from your property and stop the accumulation of penalties and interest.
Get a Tax Deferral
Texas offers a tax deferral to seniors over 65 who owe payments on their homesteads. Applying for an over 65 tax deferral will immediately stop the foreclosure process. While taxes cannot be avoided, late fees will be stopped, and interest will be reduced. Certain disabled property owners may also qualify for the property tax deferral program.
Establish A Repayment Plan with the Local Tax Assessor/ Collector
Some tax collectors offer payment plans that allow property owners to pay delinquent taxes in monthly installments. The tax assessor is required to offer payment plans only under certain conditions and circumstances; when they do, the timeframe is usually not very long. Property owners who are able to pay off their taxes in one year or less can benefit from payment plans. However, this option may no longer be available if the foreclosure process has already started. To determine if payment options are available, you will need to speak with the tax assessor or their attorney.
Investigate A Property Tax Loan
Paying your property taxes, penalties, and interest right away is the best way to protect your home from foreclosure. One of the easiest ways to do this is with a property tax loan.
While a property tax loan may sound strange, property tax loans can give you more financial freedom. A property tax lender will immediately pay off all the penalties, interest, and administration fees associated with your property tax bill and the original amount. This will stop delinquency and any foreclosure proceedings. The interest rates from a property tax loan will typically be much less in comparison to the sky-high penalties, fees, and interest you accumulate on a delinquent property tax bill.
About AFIC
American Finance & Investment Co., Inc. (AFIC) is an OCCC-registered property tax lender. We offer our clients an affordable, hassle-free way to manage their Texas property taxes. 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 and any additional advice on the requirements of your local tax authorities and the details of your property taxes, please contact our experienced team at AFIC today.
