What Will Happen If I Don't Pay My Property Taxes?

One of the responsibilities of being a homeowner is paying your assessed property tax. This generally serves as a primary source of revenue for county governments. Failure to pay your property taxes can have disastrous effects if you ignore the bill for too long, damaging your credit report and perhaps resulting in the loss of your home.

Interest and Penalties

If you haven't paid your property tax by its due date, your county might tack on penalties and interest. In addition, some counties assess administrative fees for your failure to pay the obligation on time. Penalties, interest and additional fees vary by county, so verify property tax ramifications directly with your county's assessor.

Tax Lien

If you remain unable or unwilling to pay your property taxes, your county has the right to place a tax lien on your property. Once this happens, your option to use the equity in your home to pay your tax bill is suspended, as you generally cannot refinance or sell your house until the fiscal obligation is satisfied and the lien is removed.

Property Tax Liens and Credit Reports

Your property tax lien also will be reported to the credit bureaus and your credit score could take a substantial hit. The impact depends on numerous factors, including your previous credit history. As with any other overdue debt, however, a record of the property tax lien remains on the report even after the obligation has been satisfied. Paid debt looks better than unpaid debt, but both demonstrate your inability to meet your financial obligations to future creditors.

Lien Enforcement

Counties enforce property tax liens several ways One way to recoup the overdue property taxes is to sell your tax lien certificate to a third party. The private investor or agency can assess high interest rates on your tax lien, and in some counties has the ability to foreclose upon your home in order to satisfy the tax lien certificate.

Counties may also be able to sell your home via a tax auction. Even if your home does sell, it might not be enough to cover your property tax debt and the balance of your mortgage. If not, you still will be responsible for any balances due. To add insult to injury, the county will deduct the auction fees from the total of your home's sell to recoup its costs. This information also will appear on your credit report, which could compromise your ability to purchase a new home in the future.