How Much Do I Really Pay in Penalties & Interest if I Don't Pay My Property Taxes?
Texan property owners are mostly well aware of the fact that they face some of the highest property taxes in the country. However, the tax rates themselves pale in comparison to the bill you will have to deal with if your property taxes become delinquent. Aside from being penalized for your failure to pay, you will also be charged interest on the outstanding amount for as long as the bill remains unpaid. This can soon add up to unmanageable debt.
Penalties on Delinquent Property Taxes
Failing to pay your property taxes on time results in three types of charges:
- Penalties: Additional charges imposed based on the unpaid balance.
- Interest: Accrues monthly on the outstanding tax amount.
- Legal Collection Costs: Fees added when the tax remains unpaid beyond a certain period.
Breakdown of Penalties and Interest
Interest charges are applied at 1% per month (12% annually) beginning February 1st. This continues until the taxes are fully paid.
Penalty charges increase over time as follows:
- 6% on February 1st.
- 1% added on the 1st of March, April, May, and June.
- An additional 2% penalty on July 1st can be added.
- Total penalties can reach 18% within six months.
Legal collection costs can vary by jurisdiction, but typically:
- Once your taxes remain unpaid by June 1st, a 20% collection fee (including attorney fees) is added to your balance. This fee is calculated on the total amount owed, including penalties and interest.
- By July 1st, your total penalties and legal fees may reach up to 41.6% of your original tax bill.
- After July the 20% fee is added to the monthly 1% interest charges in the future, meaning your balance grows by 1.2% each month.
Paying Your Property Taxes on Time is Crucial
Texas already has high property tax rates, and these penalties can cause your tax debt to spiral out of control. If the delinquent tax remains unpaid, you may face:
- Tax liens placed on your property.
- Legal action and additional attorney fees.
- Tax foreclosure, which could lead to the loss of your property.
To avoid excessive penalties, consider a Texas property tax loan, which allows you to pay off your tax debt immediately to stop penalties from accumulating, repay the loan in manageable installments tailored to your budget, and protect your property from foreclosure or tax liens.
Texas property tax rates are high enough as they are. These additional costs can make property owners’ tax bills soar out of control in a very short period. Therefore, it is a much better option to make arrangements to pay your taxes as soon as possible. If you don’t have the cash flow to pay it, apply for a Texas property tax loan instead. This will settle your debt with the tax authorities immediately and allow you to pay back the loan in a way that will suit your budget.
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 that 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.
