If you’re a homeowner in the great state of Texas, you’ve likely received your annual property tax bill in the mail. These taxes, while sometimes seeming hefty, play a crucial role in supporting local infrastructure, education, law enforcement, and many other essential services we often take for granted.
But what happens if you fail to pay these property taxes on time, or worse, altogether? It’s a scenario you want to avoid if possible, but it’s equally important to understand the potential consequences. Here’s what every Texas homeowner needs to know.
Penalties
The Texas property tax calendar year begins on January 1. Tax bills are usually mailed out in October or November, with payment due by January 31 of the following year.
If you haven’t paid your property tax bill by the deadline, it becomes delinquent on February 1. Starting then, penalties and interest begin to accrue.
For the first month, you’ll be hit with a 6% penalty plus and a 1% interest charge, resulting in an immediate 7% increase to your unpaid bill. Every subsequent month, an additional 1% interest is added, plus a 1% penalty for each additional delinquent month.
On July 1, delinquent taxes incur a penalty of 12% of the amount of delinquent tax, regardless of the number of months the tax has been delinquent.
Related Post: Important Property Tax Dates and Deadlines
Tax Liens
In Texas, when your property taxes are not paid, the taxing authority automatically places a “tax lien” on your property. A tax lien is a legal claim against your property, making it collateral against the unpaid tax debt. This lien exists from the moment the tax is due (January 31) until it is paid in full, or until the owner and local taxing authorities agree to a settlement.
A tax lien can have serious implications. It can affect your credit score, make it challenging to sell your property, and even lead to foreclosure.
Lawsuits and Foreclosure
If taxes remain unpaid, the tax collector can decide to sue for the tax lien. This is where things get severe. If the court rules in favor of the tax collector, your property can be foreclosed upon and then sold at auction to cover the unpaid taxes, penalties, and legal costs. This process can start as soon as a tax is 60 days delinquent.
Remember, in Texas, tax foreclosure sales are final. If your property is sold at auction due to unpaid taxes, you lose all rights to your home, and you won’t be able to repurchase or reclaim it later.
How to Avoid These Consequences
While the picture painted here may seem bleak, there are several ways to manage your tax burden effectively.
Installment Plans
Texas homeowners over 65 or disabled can pay their property taxes in installments without incurring penalties or interest. Other homeowners may also negotiate a payment plan with their county tax assessor-collector.
Property Tax Loans
Some Texas companies offer property tax loans, which essentially pay off your immediate tax debt and replace it with a loan you repay over time. Be sure to research these carefully to understand the interest and fees involved.
Homestead Exemptions and Deferrals
Texas law provides various exemptions and deferrals that can help reduce your property tax bill, especially for disabled individuals, veterans, and seniors.
Property Tax Consultants
A knowledgeable property tax consultant can help you navigate tax laws, potentially reduce your property tax liability through appeals, and guide you through various payment options.
Remember, while property taxes may seem burdensome, they are a civic duty that contributes to Texas’ infrastructure and services. However, if you find yourself struggling with property taxes, explore the options above.
North Texas Property Tax Services does not help individuals with delinquent taxes, but we are able to help individuals save on their property tax bill with our property tax protest services. To learn more about our services, register your property.