The frequency at which homeowners pay property taxes depends on state-specific payment schedules, as well as whether the homeowner pays taxes directly to the local taxing authority or the lender pays them for the homeowner from the mortgage escrow or impound account.
Direct Payment Schedules
The schedule for paying property taxes is different for each state. For example, California allows taxes to be split between two payment dates: Nov. 1 and Feb. 1. In Texas, property taxes are paid with a single payment due Jan. 31. The lead time between receiving a bill for property tax and the due date also varies widely among states. For example, Texas property tax bills are usually mailed in October and considered to be delinquent if not paid by Feb. 1. In Georgia, counties set their own protocols for mailing property tax bills with lead times of two to three months.
Lenders often require homeowners to pay a portion of their property taxes on top of their mortgage payment each month. In California, for example, an impound account is required if the amount of the loan is 90 percent or more of the property's value. The yearly property tax is calculated by the lender and then divided into 12 equal payments, which are deposited to an impound account and paid by the lender when property taxes are due.
The primary reason that lenders require these payments is that a lien placed against a property for delinquent taxes is paid first if the property is sold. This subordinates the mortgage lien, which can result in a loss for the lender if the property taxes owed are greater than the equity in the property.
Property Tax Reassessments
Depending on the state, property taxes can be reassessed for a variety of reasons including improvements, change of ownership and scheduled valuations. Applying for permits to make substantial improvements and the sale of a property are events that are recorded at local or county levels, which can lead to a reassessment of the value of the property. Each state sets its own schedule for the reassessment of property values. For example, nine states have no set schedule, Pennsylvania assesses property values annually, and Rhode Island reassesses property values every 10 years.
Homeowners can apply for a reassessment with the local tax authority if the value of the property has declined. A lower valuation can lower property tax payments