The deadline for annual property taxes is January 31st. If this deadline is missed, property owners face rapidly accumulating interest and property tax penalties on their delinquent accounts. The penalties on the outstanding balance accumulate steadily until July 1, when the biggest penalty of the year is placed on all delinquent property tax accounts in accordance with Texas property tax laws. The graph below illustrates the total penalties a delinquent property tax payer will be liable for within the first year. In this blog, we will discuss how the penalties and interest are added to delinquent property tax accounts, as well as the huge collection penalty that is added on July 1.
The exact property tax rate is determined by a local taxing authority. Assessors from the local appraisal district evaluate the worth of commercial and residential properties to determine the appraisal district’s suggested value. The appraised amount, after the taxpayer’s opportunity to protest, is then reflected on the tax bill, which typically arrives on or after October 1. Property owners then have approximately 120 days to pay their property taxes, making the payment deadline January 31 of the following year.
The property tax laws in Texas dictate that if property taxes are not paid in full by the deadline, the account will be classified as delinquent. If your property taxes are in delinquency, you will face a 6% penalty for the first month, plus 1% interest. As these penalties are cumulative, for every month your account remains delinquent thereafter, the interest and penalty rate increase by 1% each, until the end of June (2% total per month).
So, on February 1, the penalties for delinquent property taxes stand at 7% in total and accumulate an additional 2% (in total) per month they remain outstanding. This means that you are looking at additional charges of approximately 15% of your total tax bill by the end of June (10% in penalties and 5% in interest).
In July, the process changes. A 2% penalty is charged to your delinquent account (bringing the penalty up to 12%), and the penalties stop increasing. However, interest will continue to accumulate at a rate of an additional 1% per month.
The penalties for delinquent property taxes substantially increase as of July. This is because local tax assessors send delinquent accounts to their attorneys, who charge steep collection fees.
Texas property tax laws mandate that if property owners have neglected to pay their delinquent taxes by July 1, a 20% property tax collection penalty may be imposed for legal expenses, attorney fees, and court costs on the full balance owed. This means that the total July 1 penalty to you is 26.6%, $2,660 per $10,000 of base tax levy! This means that by July, your delinquent property tax bill will have accumulated nearly 42% in cumulative interest, penalties, and fees. After the exorbitant July penalty, your tax bill will continue to accumulate a 1% fee on the unpaid base levy every month.
As detailed in the graphic below, the jump in penalties from the first month of delinquency to July (month 7) is exorbitant. Taking all of the penalties, collection fees, and interest charges into account, delinquency charges for taxpayers could potentially reach 48% within the first year.
In addition to the rapidly increasing penalties, your property could be foreclosed upon at any point in the delinquency process. In the end, unpaid property tax on a residential, commercial, or rental property will result in a lawsuit. In addition to adding court costs and legal fees to an already rising balance, the lawsuit puts property owners at serious risk of foreclosure and property loss at auction.
While these consequences can be intimidating to think about, there is a light at the end of the dark property tax tunnel. By paying the outstanding property tax amount (and accumulated penalties) in full, any foreclosure processes will stop.
Texas property owners can receive help from a reputable property tax lender, like AFIC, thanks to a law that allows third-party lenders to be assigned the county property tax lien and pay off all overdue taxes, interest, penalties, and legal fees.
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:
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.
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YOUR TAX OFFICE MAY OFFER DELINQUENT TAX INSTALLMENT PLANS THAT MAY BE LESS COSTLY TO YOU. YOU CAN REQUEST INFORMATION ABOUT THE AVAILABILITY OF THESE PLANS FROM THE TAX OFFICE.
If you are over 64 or disabled, don’t get a property tax loan, contact your tax office about a deferral.
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