How to Protect Your Investment When You Hold a Mortgage and the Property Taxes Are Not Paid

Unpaid property taxes can lead to foreclosure, but there are several ways to protect your investment.

Unpaid property taxes can lead to foreclosure, but there are several ways to protect your investment.

As most homeowners know, maintaining a property can be expensive. Aside from mortgage payments, insurance premiums and general upkeep, as a homeowner you’re also responsible for paying property taxes. Unpaid property taxes can lead to foreclosure after a certain period of time, but there are a few ways you may be able to protect your investment.

Unpaid Property Tax Foreclosure

When you purchase a home by securing a mortgage, that mortgage acts as a lien on your property, meaning that the home itself is the collateral securing the loan. However, other creditors may be able to place liens on your home as well, including the local government. In fact, a property tax lien has the highest priority of any lien. This means that in the event of foreclosure, past due taxes will be paid prior to any other debts -- even your mortgage. This is why it can be tough to protect your investment without paying your property tax debt.

Tax Assessment Challenge

If you’re behind on your property taxes, you may be able to protect your investment by objecting to the reported property tax assessment. When you purchased your home, the government assessed the value of the property, which it then uses to determine your tax burden. If you believe that the assessment was higher than the fair market value, or can find examples of comparable properties which have lower assessments, you might be able to reduce your tax bill substantially, which can make it easier to pay off your tax debt. Contact your tax assessor for instructions on how to challenge your assessment.

Negotiation

If you can’t lower your tax burden by lowering your assessment, you may be able to negotiate the amount due or the terms of your bill, which will help you protect your investment. Depending on your state, you might also qualify for a tax exemption or abatement that might reduce your tax burden. These are often granted due to age, income level or disability status. You might also qualify for a deferment of property taxes or negotiate the penalties and late fees you owe.

Property Tax Assistance and Relief

If you have unpaid property taxes that are threatening your investment in your home, you might qualify for a number of government-sponsored programs that can help assist you in repaying them. Property tax relief programs vary by state and county, so you'll need to contact your tax authority to determine which programs are available and if you qualify. For example, if you are a veteran and live in Los Angeles, you may qualify for a property tax exemption up to a certain limit. Or, if your property has been damaged in a natural disaster, you may qualify for disaster relief.

About the Author

Kristen Radford Price began writing in 2005 for her campus newspaper. She has served as a feature writer for the life-and-style section of the "Daily Herald," a contributor to "Utah Valley Weekly," an editor for a small publishing house and now as director of communications for an Internet company. Radford has a Bachelor of Arts in journalism from Brigham Young University.

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