You can still save your home—If you receive a notice in the mail or at your doorstep that your house is “subject to foreclosure” or is in the foreclosure phase because of the none-payment of taxes. Each year county collects local and state taxes from homeowners and individuals. If you don’t pay your taxes on time, the IRS can attach a tax lien to your house. It doesn’t have to be just property taxes. A foreclosure can begin even when you don’t pay income taxes.
County can start the tax foreclosure process if you have been delinquent for more than four years. It is a total 5-years period if you consider the date your tax bill was issued. You don’t have to miss consecutive payments to be in the pre-foreclosure phase. Let’s say you regularly paid the taxes in 2015, 2016, 2017,2018, and 2019, but you didn’t pay taxes of 2014. It has been more than five years, and now the county can begin the formal foreclosure process. You will receive a notice that states your home is in the pre-foreclosure phase. The final auction date will be at least 30 days away.
You Pay Property Taxes with Your Mortgage Payment
Mortgage lenders are careful with this point. When you sign up for a housing loan, the lender charges you, property taxes worth a few months. Each month, along with mortgage payment, you pay the fees to the lender, which they keep in an escrow account. They do this to avoid tax foreclosures. Many people think of mortgage and home tax as the same thing, which is not valid. If you own your home clear & free, you’ll need to pay those taxes yourself.
You can redeem your home anytime before the final tax sale. Bring along the amount for pending taxes, interest rates, and the late payment penalty, and your home will be safe. Your payments are first applied to the newest tax payments. Let say you owe taxes for five years (2014-2019). In that case, your payment is first used to pay the fees of 2019, and that payment won’t resolve the issue for you. You’ll need to bring the total amount to avoid the tax foreclosure.
Tax Exemption and Deferral
After you receive the foreclosure notice, you’ll need to explain why you weren’t able to pay your taxes. You must submit a reason as outlined in the notification.
Talk to a tax attorney; you can find a way out of the situation. In some cases, you can dispute the assessed value of your house. Perhaps, your home has been overvalued, and that’s why your taxes are so high. You might be eligible for tax exemption and deferral. With proper negotiation, you can have the interest rate and penalties waived that will make it easier to pay the debt. Your tax attorney can guide you here.
There are also rescue loans available. They have less interest-rate, and you can use them to pay the taxes you owe. The point is to take action earlier, remember, before the final tax sale date, you can redeem your house and stop the foreclosure sale of your home. If you need assistance, please contact us. Our team can help you with this situation.