Advertiser Disclosure

advertising disclaimer
Skip to main content
property taxes

What Happens if You Don't Pay Your Property Taxes?

[Updated: Nov 09, 2020 ] Jun 08, 2020 by Maurie Backman
FREE - Guide to Real Estate Taxes

Learn about how you can reap the rewards of investing in the most tax-advantaged asset class in America.

*By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

As a homeowner, you're no doubt aware that the cost of owning property extends well beyond your monthly mortgage payment. You'll have to cover your homeowners insurance, maintenance, repairs, and, of course, property taxes.

Your property taxes are calculated by taking your local tax rate and multiplying it by your home's assessed value. The average property tax bill in the U.S. was $3,498 in 2018, according to property database ATTOM Data Solutions, but in some parts of the country, you'll pay a lot more.

While property taxes may have once served as a lucrative tax break, these days there's less value in that regard. Thanks to the Tax Cuts and Jobs Act implemented in late 2017, the SALT (state and local tax) deduction, which includes property taxes, is limited to $10,000. If you live in, say, New Jersey, where it's not uncommon to have a $12,000 property tax bill for an average-sized home, you lose out on some tax benefit automatically.

But regardless of whether you get the maximum benefit out of your property taxes or not, you're still required to pay them. And if you fail to do so, you could face serious repercussions.

What if you don't pay your property taxes?

Sometimes, homeowners run into financial trouble and can't come up with their property taxes as a result. If that happens to you, you could, unfortunately, wind up losing your home. Specifically, your local tax authority could put a lien on your home and eventually force its sale, just like a foreclosure sale.

That said, usually, that won't happen right away. Rather, your local taxing authority will begin charging interest on your unpaid taxes, but if you're able to catch up in a relatively short time frame, you can avoid the harsh consequences outlined above.

If you're experiencing a financial hardship, you can also try applying for property tax relief. You might qualify for an installment arrangement, where you pay your property taxes off over time rather than in a lump sum (typically, property taxes are due quarterly).

What to do if you can't afford your property taxes

If you're experiencing a temporary financial hardship that's making a specific property tax bill difficult to pay, you can, as mentioned, try seeking relief. But if your property taxes have gotten too high to bear on an ongoing basis, it pays to appeal them.

The appeals process varies from state to state. In some cases, you submit an appeals form and wait for a determination. In others, you have to go to court.

Either way, to have a shot at winning a property tax appeal, you'll need to be able to prove that your home's assessed value is higher than what it should be. You can't negotiate the tax rate that applies where you live.

How do you prove that your assessment is too high? For one thing, you can look at comparable sales in your neighborhood. If homes that are similar to yours in terms of square footage, acreage, and features have sold recently at a price that's much lower than your home's assessed value, you have grounds for an appeal. Similarly, if your tax assessor has details on your home that are inaccurate, you may be able to argue that number down. For example, if your assessment lists your home as having four full bathrooms when in fact it only has three, that's a point to put in your appeal.

Property taxes are an unavoidable expense that comes with owning a home. If yours have gotten too high, you can try appealing them, but if that fails, you may need to resign yourself to selling your home and moving someplace more affordable from a property tax perspective -- because not paying those taxes is, unfortunately, simply not an option.

The "Unfair Advantages" of Real Estate Just Got a Whole Lot Better

Investing in real estate has always been one of the most effective paths to financial independence. That's because it offers incredible returns and even more incredible tax breaks.

These benefits weren't enough for Uncle Sam, though, as a new tax loophole now allows those prudent investors who act today to lock in decades of tax-free returns. We've put together a comprehensive tax guide that details how you can benefit from this once-in-a-generation investment opportunity. Simply click here to get your free copy.

The Motley Fool has a disclosure policy.