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What Happens If You Don't Pay Property Tax?

Richard Latimer

September 14, 2021

Have you ever wondered, What Happens If You Don't Pay Property Taxes? If you’ve never paid your property tax, or you haven’t paid in a while, it may seem like an overwhelming bill.

You might have even heard rumors of people having their houses sold or being sent to jail. The truth is that your county will send you a delinquency notice letting you know how much you owe in taxes and penalties and give you a deadline to pay.

This article will provide a complete guide full of definitions, ways to make payments, and the advantages of timely payments vs. the disadvantages of untimely payments.

👍 Good to know: Every year, we pay a huge amount of property tax to the state government. The process of buying property is a lot tougher than it used to be ten years ago.

Understanding the Basics of Property Tax 

Property tax is a term used to describe taxes paid on property owned by an individual or other legal entity, such as a corporation.

The property’s value determines the amount of the tax, which is typically expressed as a percentage of the property's assessed value.

Property tax is an intangible tax. The property owner is responsible for paying the property tax to their respective jurisdiction, along with the associated fees to file an annual declaration of ownership and pay the property taxes.   

Sometimes referred to as real estate tax, it is one of the most common taxes collected by local governments.

Property tax is based on the value of land or another real estate an individual owns and its marketability.

The purpose of property tax is to provide revenue for service delivery by the government and provide incentives for owners to maintain, improve, and use their properties efficiently.

The Different Types of Payment Modes for Property Tax

The different types of payment modes of property tax or land tax vary from one country to another, and in most cases, it depends on the valuation of the property as to how often you will be required to pay taxes.

The property tax is usually payable every six months at a minimum, and once a year, it may be paid every quarter.

You can pay property tax by online mode as well as offline mode.

Online Mode 

 So, let’s learn about the steps to follow for online payment of Property Tax:

Step 1 - Firstly, Go to the Online Gateway of the Municipal Corporation of your state.

Step 2 - Select the department location where you are based

Step 3 - At the bottom right of the page, click on the Online Services option

Step 4 - Now, on the property tax, select the option of online return of property tax return

Step 5 - Read the Terms and Conditions thoroughly, then click on the file that says file property option

Step 6 - Fill in the blanks with your appropriate Property ID 

Step 7 - After filling it out properly, you will be redirected to the page where your Property Tax is automatically calculated based on your input information. 

Step 8 - Now, choose the payment option of your Choice of Cash/ Cheque/ Direct Debit.

Step 9 - Your Property Tax payment is finished.

Step 10 - You can also take its printout by clicking on the Challan Button

Offline Mode 

Property Tax can also be paid offline in your specific zone. You can get all the detailed information of your zone offline property tax payment via the Municipal Corporation Portal.

Extra Information - Contacting your county government will help increase the chance of receiving an extension and getting a break on fines and charges you may receive.

What Happens If You Don't Pay Property Tax?  

Calculating Property Tax, On A Laptop With A Calculator

What happens if you don't pay property tax? Will you go to jail? Will your house or apartment get foreclosed? What about a lien on your house?

We will explore the answers to all those questions next.

The Tax Authority has the right to hold the sale 

The tax authority will hold a tax sale to pay the back taxes owed on the home. Although this can happen with as little as $500 of taxes owed, local taxing authorities have the option of holding tax sales for as much as ten years’ worth of unpaid property taxes.

A tax lien sale is one of the consequences of not paying certain taxes (for example, property and real estate taxes). Still, it typically isn’t the first step that a local government takes to collect those unpaid taxes from a property owner.

However, if an owner receives enough of these tax liens, this might prompt a county tax office to sell the liens in a tax sale. 

The Tax Authority Can Deed sales

A tax deed sale occurs when a lender forecloses on the property taxes for a property.

The property will go to tax sale or become delinquent on its taxes, the homeowner will have failed to pay property taxes, and the property is auctioned off for a price that is less than what is owed in delinquent taxes.

A tax deed sale is one of several ways a property can be sold after owed back property taxes.

The property will be sold to the highest bidder at a tax deed sale. This means that the typical steps of purchasing a home do not apply during a tax deed sale. There are no appraisals and no need to have your loan pre-approved for financing. 

The bidding process is straightforward: you pay the bid amount to the county clerk, pay the back taxes in full, provide proof of funds, sign an affidavit, and get your deed transferred by the state land registry office. You then own the home outright with no debt and no monthly payments.

The Tax Authority Can Lien Certificate Sales 

A tax lien certificate sale allows a purchaser to get favorable rates on the taxes owed along with penalties and interest and is generally more attractive than other types of investing in that it offers a greater return.

Tax lien certificate sales are much less common than tax foreclosure auctions. The Internal Revenue Service or IRS, cities, countries, and states rarely sell tax liens on the open auction block.

Why do they sell them instead of foreclosing to collect the money owed? The answer is typically related to the fact that it takes time and money to foreclose when it's not sure that you'll get the money, so selling them can be a lot easier.

Tax lien certificate sales can be a great opportunity for investors looking for a unique investment to generate income. However, several important facts about tax lien certificate sales must be considered before investing.

🧠Things to keep in mind: Rates and taxes on property vary across the states, and it is important to understand how you can save. There are usually benefits in capital gains, debt relief, and installment payments. Do in-depth research on property tax for any real estate property or land.

Is It Essential to Pay Property Tax for Vacant Land? 

Animated Image Shows A Stamped Invoice To Acknowledge Tax Payment

Do you have vacant land and wonder what will happen if you don’t pay your property tax? You’re not alone.

Many property owners in the U.S. are liable for paying property taxes on vacant land, even if they don’t live in that state or country.

If you own land that is not being used for business or investment, you need to pay property tax on it. If there is a building on the land, an appraiser will assess the land and the value of the building. The assessed value will be determined by your city or country appraiser.

Most of the time, homes sit vacant for at least some amount time. This allows owners to save money on property taxes on their primary residence.

Every state in the US has a version of property tax, and each state's laws differ slightly. But to put it simply, property tax is what you pay to the government for owning property. Vacant land is a property, and that means it is taxable.

There are similar consequences when you don’t pay your property tax for Vacant Land compared to non-payment of property tax for your real estate property.

💡 Tip: Aim to pay property tax on time to avoid any consequences set above, but if you face difficulties, get in contact with the appropriate people.

What are the advantages and disadvantages of Property Tax?

Lady Justice

Property taxes for the house you own is an uninteresting and unjustified expense, but that's a fact of life, and it’s just got to be paid.

If you pay property tax to your municipality, there are benefits. In general, everyone should know what happens if you don't pay your property tax and what advantages and disadvantages they have.

Advantages of Paying Property Tax

Paying property taxes is one of the best ways to raise revenue for any government. That’s because they impose a fixed obligation on all property owners’ so everyone must pay.

Another important advantage of property taxes is that they allow the state to get additional tax income. They allow states and localities to raise money for other things such as infrastructure projects and social welfare programs.

In recent years, this wealth gap and the situation have been pointed out by various organizations worldwide as one of the major problems of all developing countries, which are sometimes even responsible for the collapse of entire economies.

‘Richer’ people pay higher property tax. This is because the additional money obtained can be used to help poorer individuals, help the improvement of your county, and retain the financial condition.

🌠 WOW fact: Property taxes can also be used for the health sector, technical progress, and welfare programs, along with many others.

Disadvantages of Paying Property Tax

Many investors are not paying property tax for obvious reasons, i.e., they can gain higher returns by investing their money elsewhere. Also, because this tax type is not collected by government bodies and is collected by municipalities, the temptation to skip a payment is ever-growing.

It might look like an appealing idea to you, but in the long run, it's not worth it. You should consider some disadvantages before deciding not to pay your property tax, and the ramifications can cause you to lose your property.

Interest Charges and Fees:

Interest charges are one of the big implications of figuring out what happens if you don't pay property tax.

Missing payments for your property tax will increase your bill due to interest charges; it won't just be forgotten about.

Normally, there is a grace period after the set due date, before additional charges come into effect. However, after the grace period, be aware that interests rates may be a lot higher than usual.

Redemption Periods:

If a third party buys the lien to your property, your redemption period becomes active. The redemption period is usually two to three years. In that time, you'll be given a final chance to pay your back taxes, including interest and redemption fees.

Hopefully, if you can make your payments, the investor renounces any claims on your property. However, if no payment is made throughout the period, the lienholder receives the title deed to your proper, which you must forfeit.

Remember: If you face financial hardships and struggle to pay your property taxes, you might be able to reduce your bill or be granted extra time to pay. Just seek the right guidance as soon as you can.

The Bottom Line

This article aims to fully answer the starting question, What Happens If You Don't Pay Property Tax?  

The guide aims to explain the types of methods you can use to pay your taxes, like online and offline modes, as well as picking apart the problems you can face if property taxes are neglected.

Paying your property taxes can have huge benefits to your local county. For example, the money gained from taxes can be used for welfare programs and given to the health sector.

Even if your property is vacant, you still must pay your property taxes because it’s still a property that belongs to the government.

Most importantly, remember, speaking about your problems is the best thing you can do! Ignoring any issues won’t make property tax payments disappear.

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