5 Ways To Resolve Delinquent Property Taxes,
Even If You Don't Have A Penny In Savings
Overview
An Explanation Of How The Property Tax System Works. Most counties charge you a default interest rate. It varies, but averages around 18%.
Most counties will auction off the right to collect on that tax bill. They issue a certificate to the winning bidder.
The good news is that the people bid DOWNWARD. The certificate is sold to the person who bids the lowest interest rate. This is great news for you.
In some cases the interest rate is bidded as low as 1-5%. Every state has different rules and laws regarding this.
For example, in Florida, the lowest bidder is awarded 5% interest, even if they bid as low as 1%. That is because Florida guarantees 5% interest to all bidders.
This is a good opportunity for someone who has no credit and cannot obtain a loan for a reasonable interest rate.
Their only option for a loan might have an interest rate of 18-20%. In that instance, it may be preferable to pay 5% interest versus the 18% interest charged on a loan.
Step 1: Find out how bad the situation is.
Before you do anything you need to know how bad the problem is. That way you can make an informed decision.
First, contact the tax collector and request a payoff.
Next, ask the tax collector's office when a tax auction could be scheduled. After all, it's better to know about a tax auction ahead of time, rather than have it take you by surprise.
After that, ask the tax collector's office what interest rate you are currently paying on past due taxes. In some cases, you may be paying a very low interest rate.
This is because the interest rate is auctioned with the winner being the person who is willing to accept the lowest interest rate. The interest rate can be auctioned as low as 5% and sometimes even less than that.
Then, ask them if there are any other fees and costs you will have to pay if you do not pay off your property taxes right away.
Step 2: Review Your Options To Resolve
Your Delinquent Property Tax Bill.
Option 1: Get a loan and use the proceeds to pay off your property tax bill.
However, before you get a loan, check the interest rate that you are paying for your property taxes.
If you don't have good credit, then it may be preferable to pay 5% interest on your property taxes, versus the 18% interest charged on a loan. The biggest caveat to this is any penalties or other fees that might be charged to you.
- For example, in California, if you do not pay your property taxes by the due date (December 10th), then a 10% delinquent penalty is assessed right away. If it isn't paid by April 10th, then an additional 10% penalty is assessed. After July 1st, you will be charges 18% interest, because California does not hold Tax Certificate auctions.
- You may also have to pay other fees and penalties. The tax collector may charge a fee on the tax certificate auction. They may charge a
redemption fee. - These fees may be more expensive than paying a higher interest rate.
Option 2: Sell Your Property and use the sales proceeds to pay off your property tax bill.
Why not sell your property for top dollar while the market is hot? If you are interested in selling, then give me a call at (916) 621-5521. We will talk about the process and I'll let you know how I can help. Or, send me an email at steven.glaude@yahoo.com.
Are you thinking about selling but aren't ready to start the process today? Request a Free Analysis of how much you will make from the sale.
Here is what I will provide you with:
- I'll tell you exactly what your property would sell for on the open market.
- I'll show you how to request a payoff amount for the property taxes. This is where the tax collector sends you paperwork with the exact amount necessary to pay off your property taxes.
- You can use this info to figure out an estimate of the amount that you will receive on the sale of the property.
- To request this free analysis, send me an email at Herson@BridgetsoneRE.com
Be careful if you receive an offer from a stranger when your property is not for sale.
Before you sell to them, check that you are not selling it for less than it's worth. Many investors will mail you a letter saying they want to buy your property.
They will offer to buy it, even though it isn't for sale. Now, it's not a bad idea to look at offers from strangers. It could be a fair deal for you. You could sell for a fair price and avoid paying a commission.
But, don't allow an investor to make money at your expense. Before you sign a contract; get a second opinion on the value. Any professional Realtor can provide that to you free of charge.
Option 3: Re-finance your mortgage and use the proceeds to pay off the property taxes.
Contact your bank about refinancing. In addition, get quotes from other lenders. Shop around for a loan with the best terms for you. You might even be able to obtain a loan with a lower interest rate than what you are currently paying and save money on your monthly payment.
Option 4: Repay your taxes with a payment plan with the Tax Collector.
Some tax collectors will allow you to repay the amount you owe with a payment plan. Some won't. It depends on the laws and rules for your area.
Contact your local tax collector's office and ask them if a payment plan is an option. Compare the payment plan with your other options and pick the best option for you.
Option 5: Property Tax Abatement.
Some jurisdictions may reduce or completely forgive the amount of property taxes that you owe.
This will vary, depending on the jurisdiction and your circumstances. Contact your local tax collector's office and ask them if there are any abatement options available to you.
Well, that's all folks. Thank you for reading this White Paper. Now, put what you have learned to work and sell your home for more money!
Please contact me if you have any questions or comments.
