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How Many Years Can You Go Without Paying Property Taxes in TX?

In Texas, property owners are required to pay property taxes annually, with taxes due on January 31st each year. These taxes fund crucial local services like schools, roads, and emergency services. Failure to pay property taxes can lead to significant legal and financial consequences, including penalties, interest, and potentially losing your property through a tax lien foreclosure.

This article digs into the Texas tax process, exploring the repercussions of not paying property taxes and discussing available options for homeowners who find themselves unable to pay.

We’ll look at the steps the state can take to recover delinquent property taxes and the assistance programs and payment plans available to help property owners manage or defer their tax obligations.

The Texas Tax Process

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The collection of Texas property taxes involves several key steps that ensure a timely and fair process to fund municipal services:

Appraisal and Lien

By January 1 each year, appraisal districts across Texas appraise properties to determine their market value for tax purposes. At the same time, a lien is automatically placed on all properties to secure the payment of any overdue taxes. This lien remains in place until the property taxes are fully paid, ensuring the state has a legal claim to enforce tax collection if necessary.

Appraisal Notifications

Following the initial appraisal, property owners receive notices of their property’s appraised value. These notices are typically sent out between April and May. This notification allows property owners to understand the value their tax will be based on and provides an opportunity to file an appeal if they believe the appraisal is incorrect.

Tax Rate Adoption

After the appraisal process, local taxing units, which include cities, counties, and school districts, determine and adopt property tax rates. This typically occurs during August and September each year. The adopted tax rates are then applied to the appraised property values to calculate the taxes owed by each property owner.

Tax Bill Issuance

Finally, the county tax assessor-collector issues tax bills to property owners, starting October 1. These bills detail the amount of tax owed and must be paid by January 31 the following year to avoid penalties and interest. This final step in the process alerts property owners of their tax liabilities and marks the beginning of the collection phase.

How Long Can You Go Without Paying Property Taxes in Texas?

In Texas, property tax payment has a firm deadline and structured penalties for late payment, which property owners need to be aware of to avoid escalating fees:

Payment Deadline

Property taxes in Texas must be paid by January 31 to prevent penalties. Starting February 1, unpaid property taxes are considered delinquent and penalties begin to accrue.

Initial Penalties

As soon as delinquency begins on February 1, an immediate 6% penalty is added to the unpaid tax amount. Additionally, a 1% interest charge is added for the first month of delinquency. These penalties increase over time, with an additional 1% interest added each month the tax remains unpaid. This can accumulate quickly, making delayed payments increasingly costly.

What Happens When You Stop Paying Property Taxes in Texas?

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Failing to pay property taxes in Texas leads to a series of escalating penalties and legal consequences that can significantly affect a property owner’s financial situation and homeownership status.

Accruing Penalties and Interest

As mentioned above, property taxes not paid by January 31 are considered delinquent and begin accruing penalties and interest from February 1. By July 1, total penalties can accumulate to 12%, plus 7% interest. This equals a 19% total increase over the original amount owed. This accrual process can drastically increase your debt in a short time, making it harder to settle your tax bill as time goes on.

Legal Actions

If property taxes remain unpaid, the taxing authority may hire an attorney’s office to begin collection actions. Once an unpaid debt goes to collection, additional penalties begin to accrue, including attorney fees up to 20% of the total delinquent taxes owed. If the debt remains unpaid, the attorney’s office can initiate legal proceedings to enforce payment, potentially resulting in a lawsuit against the property owner.

Foreclosure Risk

One of the most severe consequences of unpaid Texas property taxes is the risk of foreclosure. Taxing authorities have the legal right to foreclose on a property to recover unpaid taxes. The foreclosure process can be initiated as early as two years after the taxes become delinquent.

After foreclosure, the property can be sold at a tax lien auction, and proceeds are used to cover the unpaid taxes and associated legal costs.

This means property owners could potentially lose their homes if they fail to address unpaid property taxes in a timely manner.

Can You Lose Your House If You Don’t Pay Property Taxes in Texas?

Yes—Failing to pay property taxes in Texas can indeed result in losing your house through a process known as tax lien foreclosure.

Foreclosure Process

In Texas, when property taxes are not paid, a tax lien is automatically placed on the property. This lien gives the county the authority to claim possession of the property to recover the unpaid taxes. If the taxes remain unpaid, the taxing authority can initiate a foreclosure process.

This typically involves the property being auctioned off at a tax sale. The aim is to recover the owed taxes, penalties, and interest. Potential buyers can purchase the property at these auctions for the amount of taxes owed, often resulting in properties being sold for less than their market value.

Mortgage Implications

For homeowners with a mortgage, most lenders require property taxes to be paid via an escrow account to prevent such scenarios. The lender collects an estimated amount for taxes as part of the monthly mortgage payment, then pays the taxes on behalf of the homeowner to ensure they are never delinquent.

However, if for some reason this does not happen (e.g., miscalculations, or the homeowner is responsible for paying taxes independently of the lender), the tax lien takes precedence over the mortgage. This means even if the mortgage payments are up to date, the property can still be foreclosed upon for unpaid taxes, posing a significant risk to both the homeowner and the mortgage lender.

What To Do If You Can’t Afford To Pay Property Taxes in Texas?

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If you find yourself unable to afford your property taxes in Texas, there are several options available to manage the situation and avoid severe consequences like foreclosure.

Get a Tax Deferral

For homeowners who are disabled or over the age of 65, Texas offers a tax deferral option. This deferral pauses the collection process and eliminates the accumulation of penalties. However, the taxes are not forgiven and will eventually need to be paid, potentially upon the sale of the home or the homeowner’s death. This option can provide significant temporary relief, but it’s important to plan for eventual payment.

Get a Property Tax Payment Plan

Many Texas counties offer property tax payment plans, particularly for homesteaded properties. These plans allow homeowners to pay their overdue taxes in installments over a set period, typically up to 36 months. Terms and conditions can vary by county, so it’s vital to contact your local tax office to discuss available options and set up a plan to prevent further legal action.

Property Tax Loan

Another option for deferring a tax burden is a property tax loan from a private lender. These loans are used to pay off your entire tax bill in one lump sum. Then, you can repay the lender over time according to the terms of your loan.

Property tax loans often have flexible payment options compared to the strict penalties imposed by tax authorities. However, loan terms can vary widely, so compare different lenders to find the best loan for your situation.

Can You Be Exempt From Paying Property Taxes in Texas?

A surprising number of Texas homeowners can qualify for property tax exemptions, which can drastically reduce financial burden and save you from losing your home.

Eligibility for Exemptions 

There are several eligibility criteria for property tax exemptions in Texas. Here are some common types of exemptions:

  1. Homestead Exemption: Homeowners can apply for a homestead exemption on their primary residence, which reduces the taxable value of the property. This exemption is available to all Texas homeowners and is one of the most common exemptions.  According to Texas Comptrollers, there are no detailed requirements for qualifying for a homestead exemption beyond using your home as your primary residence. 
  2. Disabled Veterans Exemption: Veterans with a service-related disability are eligible for a property tax exemption based on the percentage of their disability. The exemption amount increases with the degree of disability.
  3. Surviving Spouse Exemption: The surviving spouses of members of the U.S. Armed Forces who were killed in action may be eligible for a 100% property tax exemption on their primary residence.
  4. Agricultural/Open Space Exemption: Properties used for agricultural purposes, such as farming, ranching, or timber, may qualify for special valuation methods that significantly lower property taxes compared to market value assessments.
  5. Solar and Wind-Powered Energy Device Exemption: Homeowners who install solar or wind-powered energy devices on their property may qualify for an exemption. The amount of the exemption is equal to the amount of the appraised value of the property attributable to the installation of the energy device.
  6. Charitable Organization Exemption: Properties owned by certain charitable organizations and used exclusively for charitable purposes may be exempt from property taxes.

Application Process

To take advantage of these exemptions, homeowners or property owners must apply with their local county appraisal district and provide any necessary documentation to prove eligibility. The deadlines for these applications typically fall on April 30th for the exemption to apply for that tax year.

Senior and Disabled Exemptions

Seniors (individuals aged 65 and older) and disabled individuals are eligible for additional exemptions on their property taxes in Texas. These exemptions are provided on top of the standard homestead exemption and can result in considerable savings.

  1. Exemption Amounts: The amount of the exemption can vary by county and school district, but regardless, it effectively reduces the assessed value of the home for tax calculation purposes. For example, a county might offer a $10,000 exemption, which means $10,000 is deducted from the appraised value of the property when calculating owed property taxes.
  2. School Taxes: For school taxes, all homeowners who qualify for a homestead exemption are eligible for a $25,000 exemption from their home’s value for school district taxes.
  3. Tax Ceiling: Another benefit for seniors and disabled individuals in some jurisdictions is a “tax ceiling” for school district taxes. A tax ceiling freezes the total amount of school taxes owed each year unless significant improvements are made to the home (other than regular maintenance).

Application Process

To receive these exemptions, you must apply with your local county appraisal district. The application process involves filling out an exemption application form and providing proof of age or disability, such as a driver’s license and/or documentation from the Social Security Administration.

This application is typically due by April 30th to affect taxes for that year. Once granted, the exemption is applied annually until a status change occurs (such as the sale of the property or the death of the beneficiary).

How To Estimate Property Taxes

Using Past Bills

One of the most straightforward ways to estimate your future property taxes is to refer to your most recent property tax bill. This bill provides a breakdown of your current tax obligations and can serve as a reliable baseline for future estimates.

It’s also wise to set aside funds throughout the year to ensure you can meet your property tax obligations when they’re due. Establishing a dedicated savings account for property taxes and contributing to it regularly can help you avoid financial strain when tax time comes around.

Market Fluctuations

Property taxes are directly influenced by the assessed value of your property, which can change due to market fluctuations. An increase in your property’s market value will likely result in higher property taxes, while a decrease might lower your tax bill.

Staying informed about local real estate market trends and recent sales of comparable properties in your area can give you a sense of how your property’s assessed value might change. Additionally, be aware of any improvements or changes to your property that could affect its assessed value and, consequently, your property taxes.

Conclusion

Paying property taxes in Texas is an essential responsibility for homeowners, with taxes due annually by January 31. Failure to pay on time can result in significant penalties, interest accruals, and even the risk of foreclosure.

For those struggling to meet their property tax obligations, various options are available, including tax deferrals for seniors and disabled individuals, payment plans, and property tax loans. Understanding these options can help homeowners manage their finances and avoid severe consequences.

Get Expert Help

If you’re facing difficulties paying your property taxes, don’t hesitate to seek assistance. Contact A-List Properties online or by calling (972) 526-7042 today.

We can help you navigate your tax-deferment options, find solutions to avoid foreclosure, and resolve your property tax issues with as little stress as possible.

Sell My House Fast Texas | We Buy Houses Texas

Zach Shelley

Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.

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