Having your home go to a tax sale is a scary and difficult situation to be caught in, and once it begins, it can feel overwhelming and like there is no way to stop it.
But fortunately, that is not always the case.
There are ways to stop property tax foreclosure and if you need to save your home from being lost, then here is some crucial information that will help you understand property tax foreclosure and lead you through the first few steps to saving your home.
Defining Property Tax Foreclosure
To understand property tax foreclosures, you need to first know about property tax.
Property tax is the tax paid on a property owned by an individual or corporation. It is calculated using the property’s location, the value of the owned property, and the land it is built upon. If you own a property, you must pay property taxes annually.
The money generated from property tax goes towards funding local services, such as law enforcement, education, and road construction. If you fail to make these payments, then the property tax foreclosure process begins.
If your property tax is not paid on time, then penalties are put in place. If your property tax is not paid or is incomplete one year after the payment was due, then your property is placed on a preliminary forfeiture list.
After the second year, your property is forfeited to the county treasurer.
The property tax foreclosure process takes three years to complete, after which you may end up losing your property and damage your credit, leading to a number of consequences.
How To Stop Property Tax Foreclosure
If you are facing property tax foreclosure, you still have options available to save your home. You are able to stop the foreclosure at any point leading up to the completion of the foreclosure process.
There are two paths available for you to take to stop the foreclosure process: you can pay off all the taxes you owe, or you can sell your property.
To stop a property tax foreclosure through paying back the owed taxes, you will also have to pay back any associated fees and interest on your debt. Interest rates during the first year of foreclosure are set at 1 percent per month, but the interest rate will increase in the second year to 1.5 percent.
So if you are able to pay back your property tax, it is best to do so as soon as possible as the amount you will have to pay back will only increase the longer you wait.
Otherwise, you can spread the payments out and pay off your debt bit by bit, but this will accrue more fees and interest the longer it takes.
After the second year and your property is forfeited, you can only pay off your owed taxes in one lump sum instead of spread out payments. This is obviously more difficult to do, especially as the monthly interest has now increased.
To pay off your accrued debt and stop the property tax foreclosure, there may be emergency loans available to you to help you meet the deadlines, after which you can pay off over a longer period of time.
Some taxpayers can apply for deferment of property taxes, but it is difficult to meet the eligibility requirements. This option is only available to some low income, disabled, veteran, or elderly applicants.
Deferring your property tax means that taxpayers will have more time to pay back the owed taxes, but it does not stop the property tax foreclosure from happening again the next time the property tax is due.
Selling Your Property
If you can’t pay your property taxes and tax deferment is not available to you as an option, then the only other way to stop the property tax foreclosure is to sell your home.
Rather than waiting for your home to go to auction after the three year foreclosure process is complete, you can sell your property yourself and then use the money to pay off your property taxes.
You will have to part with your home and find another property you can better afford, but this option will save you from the severe hit to your credit score.
A poor credit history can mean a lot of different things depending on what you aim to do and what you wish to apply for. You will be ineligible for a lot of loan options, and those you can apply for will come with higher interest rates. It can also make finding a new home more difficult, and can even affect your reputation when looking for employment.
Taking this into consideration, this makes selling your property the easier option compared to allowing the property tax foreclosure to complete.
Selling your property before the foreclosure completes, you can apply for a new loan or purchase another property with less hassle and allow you to be in a better position financially to rebuild your credit.
If you have decided to sell your house to stop the property tax foreclosure, then you will need to sell your property quickly so you won’t accrue even more debt through interest and fees. This means you will have more money left over to put towards buying a new home and rebuilding your credit.
To sell your property quickly, you can price your house competitively and wait for a buyer. This will take time but a competitively priced house will draw buyers in and entice them to make an offer.
On the other hand, you can sell to a real estate agent to get your property off your hands as soon as possible. This option is much quicker and can be closed in as few as five days.
Although it can be a frightening position to be in, having your home in a property tax foreclosure process does not mean you have to lose your home. There are options available to you to stop the foreclosure and save your home.
You are able to repay your owed property tax right up until the foreclosure process finishes, although this will cost more due to interest and fees. But even if this option is unavailable to you, you can always sell your property quickly to stop those fees from accruing and save your credit score.
So keep these options in mind if you find yourself behind on your property taxes, and you can stop the foreclosure whichever way you choose.