If you own property in Texas, chances are you have to pay property taxes. They are due on January first every year in Texas, so prepare ahead of time. But what if you can’t pay the tax on time? How long can you go without paying, and what happens if you stop paying?
We’ll explain the Texas Tax process, how long you can go without paying taxes in Texas, what happens if you stop paying them, whether you can lose your house, and your options if you can’t pay property taxes in Texas.
The Texas Tax Process
The Texas tax process involves a few steps:
- Appraisal districts are required to appraise properties by January 1 every year. Each taxable property has a lien to ensure you pay your property taxes.
- Appraisal districts complete their appraisals between January 1 and April 30 and process applications for exemptions.
- During April and May, appraisal districts send notices of appraised value to Texas residents.
- Appraisal review boards hear protests from property owners between May and July, make determinations, and approve appraisal records.
- In August and September, local taxing units adopt tax rates.
- On October 1st, local taxing units, or the county tax assessor-collector, acting on their behalf, begin sending tax bills to property owners.
How Long You Can Go Without Paying Property Taxes in Texas
Your property taxes are due around the same time each year if you live in Texas. However, if you’re new to Texas, most jurisdictions require them to be paid by January 31.
The tax collector sends property tax bills sometime between October and December of the previous tax year. This gives homeowners a few months to a few weeks to pay them.
They must be paid by January 31; on February first, the Texas Comptroller’s office considers all unpaid taxes delinquent. Sometimes, taxing authorities will honor a January 31 postmark, but it is best not to take that chance.
What Happens When You Stop Paying Property Taxes in Texas
If you’re late on your property taxes, you’ll receive an additional penalty of 6% and start accruing 1% interest. Therefore, you’ll have taken a 7% hit on February 1st. The penalties and interest increase by 2% from March 1 to July 1.
Penalties, fees, and interest go up to 22% on July 1 after accruing many collections fees. You’ll also receive a 1% interest charge each month from July through December.
Most taxing authorities get help from attorney’s offices to collect past due taxes. You’ll usually see a penalty of at least 20% to cover attorney fees plus court costs when that happens. This causes a significant July spike in fees.
It’s common for a single property to receive collection bills from multiple law firms – one for the county, another for the independent school district, and another for the utility district.
Taxing units may let property owners set up installment plans. However, remember that this is not a mandatory option unless a homestead exemption is involved. But even then, you could expect to pay a large down payment, with a 12 percent annual interest rate.
The taxing unit may sue you to collect your delinquent property taxes if your tax bill is far behind. This will result in adding court costs to the outstanding amount.
Don’t think you’ll be off the hook when you sell your residence homestead or business. According to the property tax code, delinquent property taxes can still be collected from the original owner, even if you sold or transferred the property.
You can go into foreclosure at any time when you’re behind on your taxes. If it’s uncontested, it can take about 60 days to complete. A lienholder can foreclose on your property if you don’t pay the lien within a reasonable timeframe. After the lien is placed on the property, it usually takes 60 days to 120 days to be auctioned.
Can You Lose Your House If You Don’t Pay Property Taxes in Texas?
Possibly. Some mortgage lenders set up property taxes to be paid out of an escrow account. The borrower then has to pay additional money for the property taxes, homeowner’s insurance, and homeowner’s association fees. There are always companies that buy houses Texas residents need that you can sell to.
Fortunately, if you are in a bind, we buy houses Fort Worth residents are looking for, here at Four 19 properties.
If your mortgage isn’t set up like this, you’ll have to pay the property taxes yourself. You risk a lawsuit if you don’t pay your taxes, adding to your balance, which is probably already a lot more than you can handle.
If you don’t pay your property taxes, the delinquent tax amount becomes a lien on the property. The tax office can start a foreclosure in court any time after the property tax becomes delinquent.
An unpaid property tax is delinquent if a taxpayer doesn’t pay it before February first of the year following its assessment and billing, with a few exceptions. If you don’t pay off the overdue amount or have a valid defense against the foreclosure, the court will enter a judgment, and a new owner can buy your property at auction.
If the home doesn’t sell at tax sale, it will be struck off to the county, which means the county gets the property. The county will then try to sell it at a later date.
Under Texas law, you must receive written notice of the sale before it takes place. Usually, you’ll receive the notice personally or in the mail. It includes the date, time, and location of the sale. It’s also published in a newspaper or posted publicly if there’s no newspaper in your county.
If you want to stop the tax foreclosure, you can pay off the judgment at any time before the sale. Curing the delinquency releases the tax lien and stops the foreclosure process. Payment options include check, money order, credit card, or electronic funds transfer.
If you don’t cure the delinquency, the highest bidder can buy your home at auction. The minimum bid must be the lesser of the aggregate amount of the judgment against the property or the home’s market value.
Taxing units may terminate the sale if no bid meets the lesser of the judgment amount or the property’s fair market value, or a taxing unit may bid on the property for the lesser of these amounts unless other taxing units have consented.
What To Do If You Can’t Afford To Pay Property Taxes in Texas
If you cannot afford property taxes in Texas, you have a few options. If you absolutely must, you can look for cash home buyers Arlington may have to get out of debt. Of course, you’ll also have to consider the cost of selling a house in TX.
Make a Late Payment
Making a late payment is expensive, however. Penalties start adding up rapidly after the January 31st tax payment deadline. If collection attorneys become involved, they can add 20% to the overall cost of your tax bill.
Get a Tax Deferral
If you’re over 65 years old, and the property you owe payments on is your homestead, you can get a tax deferral from the state of Texas. You can’t avoid taxes, but your late fee penalties will stop, while interest reduces to 8%.
If you don’t live in the home anymore, you’ll need to pay the accumulated taxes within 180 days to prevent foreclosure. If you receive a tax deferral, it’s wise to make interest payments you can afford to minimize the accumulated amount.
Get a Property Tax Payment Plan
If you know you can pay off your late taxes and prepare to pay next year’s taxes without assistance, you can get a property tax payment plan. If you owe Texas property taxes on your home, taxing entities are required to offer you a payment plan. Payment plan details vary by county, but there are a few points to keep in mind:
Down payments can be as much as 25%, and they can have interest rates as high as 12%.
You are usually required to make equal monthly payments for 12-24 months. This often results in relatively high monthly payments.
You can only get a property tax payment plan once every two years.
If you default in making a payment, you will be charged interest and penalties retroactively.
Can You Get a Property Tax Loan?
A property tax lender can pay your property taxes right away and protect your property with a property tax loan. Payment plans for property tax lenders are flexible and come with low monthly tax payments.
Can You Be Exempt From Paying Property Taxes in Texas?
If you are 65 or older, or a disabled person, you can get a property tax exemption in Texas. This means you won’t have to pay property taxes in Texas, not that you’ll delay when you have to pay taxes. You have to apply for tax exemption in your appraisal district to get an exemption.
How To Estimate Property Taxes
Wondering about property tax exemptions? One way you can reduce the risk of paying your property taxes late is to estimate how much your property taxes will be and then set aside money throughout the year, so you have enough to pay them when they come due.
To estimate your property tax, look at your most recent property tax bill. You can use that calculation to estimate what your property tax might be the following year, but remember that property taxes can change because they’re based on the assessed value of your house. This can fluctuate depending on the real estate market.
That’s an outline of the basics you need to know about how long you can go without paying property taxes in Texas, what happens when you stop paying property taxes in Texas, and your options if you can’t pay your property taxes. In case you’re unable to pay your property taxes and want to avoid foreclosure on your home, please get in touch with us.