How to Prevent Property Tax Penalties: Essential Tips
In the 1970’s in Texas, property taxes were roughly 2%-3%, on average, of a Texan’s income. Then in 1982, Texas abolished the state property tax making local governments fully responsible for property tax collection at the district and county level. Fast forward to the 2000’s and that average tax to income ratio had risen to 4%-5%. No homeowner wants to default on their property taxes, but as inflation occurs and property values increase, so do property taxes. If you are a Texan struggling with your property taxes, and you want to prevent property tax penalties, here are some essential tips.
Understand The Penalty Timeline
Property tax penalties follow a ‘timeline’ and a ‘certain percentage’ to calculate what those fees are, the longer your taxes go unpaid. You can find the Texas property tax penalty chart here. There is a method to the madness. Property taxes are due on January 31st of each year, by February 1st, you are delinquent and the penalties and interest begin. Your first penalty and fee occur on February 1st at a rate of 7%.
If your property taxes go unpaid until July, you’ll be hit with the biggest penalty, up to 47% and then your unpaid taxes are eligible to be turned over to an attorney for foreclosure proceedings. When it comes to property tax penalties the easiest way to avoid them is to pay your bill as early as possible. The earlier you pay, the less penalties there are.
Consider Your Options Early
Many counties offer payment plans if you can’t pay your taxes all in one chunk, but only if you apply early. The general rule of thumb is that you are required to apply for a payment plan before the first payment is due, so January 31st. Those over 65, disabled, or a veteran may qualify for additional payment options depending on their county.
However, some counties, like Travis County offer several payment plans for delinquent taxes that keep you from the risk of foreclosure, but only if you arrange the payment plan before certain benchmarks. You also still incur penalties on the payment plan, depending on which option you choose. Dallas County also offers a homestead payment plan to be set-up once you’ve become delinquent, but you must be claiming the homestead exemption to qualify.
Apply For An Exemption
A property tax exemption lowers the taxable value of your home, thereby lowering your tax bill. For example, the Homestead Exemption as of 2024 was worth $100,000+ of value removed from your home’s taxable value. However, recent legislation may raise that to $150,000 as early as next year. Texas offers several types of exemptions to help lower your property taxes, but each exemption has a due date, so check with your county office early.
Ask For Help
If the deadline for your property taxes is approaching, don’t wait until it’s too late. Payment plans, exemptions, deferments, grants, and programs exist all over the state to keep Texans in their homes. Already delinquent and facing another deadline? A property tax loan could stop the risk of foreclosure and eliminate your delinquent property taxes immediately, without hurting your credit score.
Can A Property Tax Loan Help Me?
If you are looking to avoid further penalties and are already delinquent on your property taxes, a property tax loan from a licensed Texas lender, like Johnson & Starr could be the perfect solution. A property tax loan allows the lender to pay off your property taxes directly while allowing you to pay off the loan in smaller, more manageable installments. It also ends all legal threats and accruing penalties.
Johnson & Starr Can Help
If you want to avoid any additional delinquent property tax penalties, we can help you secure a property tax loan that fits your needs. Contact us today to learn more.