Owing back property taxes is a stressful time for anyone. They didn’t have the funds to pay the property taxes originally and now they are racking up interest charges at very high rates. For example, in Suffolk County, when property taxes are overdue, the homeowner must pay a 5% fee plus 1% per month that the payment is late. When property taxes on Long Island are some of the highest in the country, averaging $9,333 in Suffolk and $11,232 in Nassau, these charges add up quickly.
Property taxes on Long Island are managed by the Nassau and Suffolk County governments. The county in which you live utilizes this money for various purposes, including giving this to the schools or even funding the emergency personnel of the area. Therefore, while no one enjoys paying these property taxes, they are a necessity to keep the area running smoothly and for kids to have what they need in school. The taxes are often based upon the value of the home and the amount that the county deems they are charging for every dollar of home value. While you may notice that the appraised value (the amount the counties use to determine your tax liability) of the home doesn’t equate to what you believe your house is worth, that is because they often use convoluted formulas to calculate this amount. One quick tip if you are up to date on your property taxes, is that you can have a company “grieve your taxes” and try to lower your tax bill for next year – you often only pay them if they are successful.
When back property taxes are owed, can the house be sold? Most people automatically think that no, you are stuck with the home. However, that is not true. A home with back taxes can be sold. But, the back taxes have to be paid in order to sell the home.
What Happens When Property Taxes Aren’t Paid?
When a person doesn’t pay their property taxes, as earlier mentioned, the fees and interest will start to accumulate the longer the taxes remain unpaid. In a short period of time, this amount owed becomes extremely high. For this reason, it is important to move quickly if you find yourself falling behind.
Every year, Nassau and Suffolk Counties will put a tax lien on the homes which are delinquent. This means that you cannot sell the home until the taxes and interest/fees have been paid. It also means that you cannot get a second mortgage or a line of credit on the home because of these tax liens. Once a tax lien is placed on the property, the local government will actually sell the tax liens because the counties need the money as soon as possible so they can spend it on budgeted items.
While the county can keep adding interest to these taxes, they do not have the right to come in and actually take the home from the homeowner until you have been delinquent for 3+ years. Every year Nassau and Suffolk County hold tax auctions where people can essentially pay your taxes for you – when you ultimately pay your back taxes, that money goes to the investor. However, if taxes remain unpaid for 3+ years, the person who paid your debt has the ability to foreclose on the home and take it over. The moral of this is that back taxes are never good for the homeowner, and you should do whatever you can to avoid having to deal with this or face ballooning fees and risk losing your home.
What Are Your Options When Faced with Back Property Taxes?
1) Get a Loan
You can search out lenders to give you a loan to pay off your back taxes. There are several that offer such loans, however, they often come with high-interest rates simply due to the fact that these are higher risk investments.
2) Negotiate With the County
For those who do not want to have to get a loan for these taxes, you can explain to the tax office the issue. This is a great option for those who are just experiencing temporary hardship and will be able to repay these soon. You may be able to negotiate a repayment plan for your back taxes that will allow you to repay these and avoid foreclosure or tax liens placed on the property. After the coronavirus settles, the local governments may be more accommodating to situations of hardship and provide more flexible repayment options.
3) Walk Away From the Home and Face Foreclosure – BAD OPTION
You do have the option of just walking away from the home. While you will still owe back taxes, you are letting the government take this home and put it into foreclosure. However, this is a decision that should not be taken lightly. Your credit will reflect that you did this and it can make it much harder to buy a home or find a rental apartment in the future. If this is an option you are considering, please give us a call and we can help advise whether facing foreclosure is actually the best option for you – it more than likely is not.
4) Sell Your Home Quickly
Assuming you are unable to catch up on the payments, the best option is typically to sell the house fast before facing foreclosure and losing the home. This way you can take the back taxes owed out of the sale price of the home, be done with the entire situation, and hopefully walk away with some money in your pocket and your credit unharmed. This is often the best since you do not want to have to deal with a foreclosure on your credit history.
We can help you in this situation! We have worked with tons of homeowners who have a property with back property taxes in Nassau and Suffolk County. We were able to give them a cash payment for the home that helped to get them out of this situation. We can close very quickly ensuring that you are not accruing even more interest on these back taxes. We’ve helped dozens of Long Island homeowners navigate similar situations, so give us a call and we’ll see how we can best help.