How Do I Stop a Property Tax Foreclosure?

Property tax foreclosure is a complicated situation to be in. Once the foreclosure process has begun, it can seem like there’s no way to get ahead of it. Fortunately, you can stop property tax foreclosure and understanding how it works is critical to saving your home and your credit.

What is Property Tax Foreclosure?

Property tax is a fee you pay the county you live in, based on the value of your property. This tax must be paid annually. If you fail to pay your property taxes, the property tax foreclosure process takes three years to complete, after which you may lose your home and significantly damage your credit.

To better understand how to stop property tax foreclosure, let’s start by taking a look at how the property tax foreclosure process works.

Property Tax Foreclosure Process

If property taxes are not paid on time, the tax is considered delinquent and penalties are applied. After one year, if the property tax payment is not made or is incomplete, your property is placed on a preliminary forfeiture list

At this point, you can stop property tax foreclosure if you’re able to pay back the owed taxes and any associated fees and interest. Interest rates during the first year are at 1 percent per month, but they will go up to 1.5 percent after the first year. It will be easier to pay back the missed taxes if you’re able to pay them sooner, rather than wait — even if you can only make payments toward the owed amount.

After Year 2, the property is forfeited to the county treasurer. Forfeiture does not mean the same as foreclosure. You can continue to live in your home after the property has been forfeited. However, once you’re in the forfeiture stage, you can only pay back all the owed taxes in a lump sum in order to stop property tax foreclosure. This is a very difficult thing to do if you’re still struggling to pay back the taxes and accrued interest from the first year of delinquency. 

How to Stop Property Tax Foreclosure

Once we can assess where you are in the process, we can understand the best way to stop property tax foreclosure for your situation. If you’re facing forfeiture or property tax foreclosure you still have options to save your home: you can pay off all the owed taxes, or sell your home in order to stop property tax foreclosure.

How to Stop Property Tax Foreclosure by Paying Owed Taxes

To stop property tax foreclosure you will need to pay back the owed taxes. Depending on where you are in the property tax foreclosure process, you may either be able to spread out payments over a year, or you’ll need to make a single payment. If you don’t have the necessary funds right away, there may be emergency loans available to help you meet tax deadlines, after which you can pay back the taxes over a longer period of time.

Some taxpayers may be eligible to apply for deferment of property taxes. Eligibility requirements are steep, and only some low income, disabled, veteran, or elderly applicants may be permitted to defer taxes. 

Property tax deferment allows taxpayers more time to pay back the owed taxes. However, it cannot stop property tax foreclosure from moving forward once taxes are due.

Can’t Pay Your Property Taxes? Here’s How to Stop Property Tax Foreclosure

If you can’t afford to pay the property taxes and tax deferment isn’t an option, you will likely need to part with your home in order to resolve the delinquent taxes. Rather than wait for your home to go to auction, you can take control of your situation and sell your home on your own terms. Then, you can pay the owed tax and move on in a home you can better afford.

The advantage of stopping property tax foreclosure by selling your home is that you can avoid the severe hit to your credit that happens in a foreclosure. This puts you in a better position to rebuild your credit and financial status, so you can apply for a loan or purchase another home in the future.

How to Stop Property Tax Foreclosure by Selling Your Home

When you sell your home to stop property tax foreclosure, it’s important to complete the sale quickly. If you sell your home fast, you won’t accrue as much interest, so you’ll be able to pay off the tax and use the rest of the sale towards your next home.

To sell quickly, you can price your home competitively and wait for a buyer to find you, or sell to a real estate investor for a quick and hassle-free sale.

Price Your Home Competitively

When you sell your home on the traditional real estate market, it may take time to prepare your home for sale, work with a Realtor, and wait for a buyer to make an offer. Pricing your home competitively may entice a buyer to purchase your home in time to stop property tax foreclosure. Alternatively, if you don’t want to go through the process and hassle of selling your home this way, you can sell to a real estate investor.

Sell Your Home to a Real Estate Investor

Selling your home to a real estate investor is a great option if you need to sell quickly. Real estate investors will purchase your home as-is, meaning no preparation needed to get it ready to sell. They will make you a fair offer based on the market value of your home in its current condition. 

Also, because offers from real estate investors are often in cash, the closing process is simplified, so you can close the sale in as few as five days or on your own timeline. If you’re looking for a fast, simple option to sell your home to stop property tax foreclosure, this is it.

If your property is at risk of property tax foreclosure, now is the time to talk to Hometown Development. Foreclosures become final at the end of March, so there’s still plenty of time to find a solution. Let our team help.