Property owners in Texas can enjoy significant benefits because of their investments. The longer they own their properties and continue to pay back the mortgage loan, the more equity they will have, which can be used to refinance or sell for a profit in the future. However, owning a property comes with many regular costs. One of those costs is property taxes.
To remain the owner of your home or investment property, you must pay property taxes to the local government. The exact amount is determined by tax assessors based on the fair market value of your home. However, as a property owner, you must be aware of the danger of not paying taxes, as it could put your ownership at risk.
When Are Property Taxes Due in Texas?
States differ on when property taxes are due. According to the Texas tax code, the tax bill is paid once yearly at the beginning of the year. The tax assessor in your local municipality is required to send out bills for Texas property taxes to homeowners by October 1st.
Although your taxes are technically due upon receipt of the bill, you have until January 31st to pay them without accruing any interest or late payment fees. If you have an Escrow account, the tax assessor likely sends the property tax bill to your mortgage holder since they handle the tax payments for your property.
You Can Lose Your House for Delinquent Property Taxes
Failing to pay tax bills on your property can result in your ownership of the home being revoked. These are known as delinquent property taxes. If you pay delinquent taxes after January 1st, accrued interest will start to make the total property tax bill cost even more. Additionally, if you do not pay the initial bill on time, late fees will likely be added as well. Between penalties and interest accrued, a delinquent tax payment is best avoided since it will cost you more than just paying on time.
Every property owner who fails to address unpaid property taxes by the delinquency date risks losing their home through the foreclosure process.
Tax Lien
Unpaid taxes on your property will usually result in a tax lien being placed on the home. This is a legal claim on your property if you fail to pay back the debt that is owed to the creditor. In this case, the local government is the entity that would place a tax lien on your property.
If you don’t pay your property taxes and cover the delinquent taxes on time, the property tax lien will force the taxing authority to begin foreclosure proceedings immediately. A tax lien always has specific repayment deadlines, so each Texas homeowner knows how long they have to secure payment.
Tax Bill Penalties
Penalties for tax payments that are considered delinquent will raise how much you owe to the government for unpaid property taxes. Penalties can vary from town to town. There is typically an immediate penalty for the late payment on the initial bill and then accrued penalties the longer you fail to pay taxes and overcome the debt. Here are the penalties in the state of Texas for unpaid property taxes:
- 1% interest for each month the tax is unpaid
- 6% penalty for the original tax bill
- 12% penalty after February, plus 1% for each additional month, rising to 2% in July
- Up to 20% penalty in legal fees if payments remain delinquent on July 1
- A total of 44% of penalties on delinquent accounts after one year
Your Home Can Be Sold at the Property Tax Sale
A property tax sale process may occur if you have overdue amounts of property taxes. Bidders can attend an in-person auction to bid on your property. Minimum bids must match the lesser amount of either the judgment against your property (taxes owed plus interest and penalties) or the fair market value of the home.
Even if a sale goes through, there is still a redemption period in which you could pay the debt in full and maintain ownership. If the auction does not meet the real property value of your home or the judgment against it, then the county could take possession of the home.
Right to Redeem in Texas
How many years can you go without paying property taxes in Texas? The answer depends on how soon a sale occurs and when the foreclosure process is initiated by the local appraisal district.
Property owners in Texas have the right to redeem, which means paying the debt and retaining ownership of the property. To redeem the property, you may need to pay the property tax bill, the penalties, and a redemption premium to the buyer who won the property at the property tax sale.
The standard redemption period in Texas is 180 days. If you wait until after that time to redeem, you will likely lose your house because of unpaid property taxes.
Can You Remove Property Tax Liens?
Learning that your home has a property tax lien can be a scary experience. If you do not pay the necessary amount of property taxes in Texas, you could lose your home. There are three primary ways to remove a lien on your property.
First, you can pay back what is owed as well as any penalties and interest within 30 days. Second, you can apply for deferred collection of payments if you are an elderly or disabled person with residential homestead properties. Third, you can protest the lien by filing an appeal if the lien was placed in error, the IRS did not follow proper procedures, the debt has already been paid, or you are in bankruptcy.
Can You Sell a House With a Tax Lien on It?
Many Texas homeowners can benefit from selling their homes even if tax liens are placed on them. It all comes down to how much equity you have in the property. With enough equity, you can use the proceeds from the sale to pay off your mortgage and pay back the unpaid property taxes in Texas.
If you do not make enough money from the sale, you may have to pay the amount owed beforehand using property tax loans with monthly installments or ask the government to discharge the debt, which is far more complicated.
If you are looking to sell your home because of a lien, cash home buyers in Texas can be the solution. The team at A-List Properties will provide a fast and fair cash offer to buy your property as-is. You can then use the proceeds to pay off all your debts.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
