Filing Taxes Properly

If you've recently found yourself scrambling to pay the bills after a job loss or major medical expense, you may be starting to feel like a professional juggler: analyzing due dates, late payment penalties, and other data to decide which debts and bills deserve priority. Unfortunately, this process can sometimes cause certain expenses to fall through the cracks -- and if you've been conscientious about paying your mortgage to avoid foreclosure but have neglected to pay your property taxes, you could still be facing the loss of your home. What are your options after you've failed (or forgotten) to pay your outstanding property taxes? Read on to learn more about tax settlements to determine whether this is a viable option for you.

What will happen once you've become delinquent on your property taxes?

Each state handles its tax lien and foreclosure processes a bit differently, but in all states you'll be provided with a notice of default before further action is taken. This will inform you that you've failed to pay your property taxes for a certain period and will list a "reinstatement amount" -- the amount you're now required to pay. The reinstatement amount will often include late charges, interest, and other fees in addition to your base tax payment.

If you aren't able to afford a lump sum payment and don't make alternative arrangements, the taxing authority will file a lien on your home. This tax lien may remain on your home until it is later sold (at which time, the taxing authority will have the first cut of any profits). In most cases, the taxing authority will call the lien due, forcing your home into a tax sale. If you're unable to repay the back taxes before your home is sold (or within a certain period of time after it has been sold, known as the redemption period) you'll forfeit all legal rights to your home and may even lose the equity you've spent years building.

Can you enter into a settlement with your taxing authority?

While you may see your tax bill as as no more negotiable than your mortgage (or even the cable bill), once this payment has become delinquent the taxing authorities are granted a bit more flexibility to collect payment -- even if this means for settling for less than the total amount owed. Because cities, counties, and parishes must front the costs of selling your home at a tax auction (and are faced with an inability to collect taxes on this property in the meantime), it's often in their best interest to collect a fixed amount up-front rather than wait on a potentially larger amount down the road. You could even wind up paying less than you initially owed after fines and fees are waived.

Once you've received your notice of default, you should consult an attorney who is experienced in foreclosures and tax sales to help you determine whether negotiating a settlement is a good idea for your specific situation. While most settlements are mutually beneficial for both the taxing authority and the homeowner, it's always wise to seek advice from someone who isn't personally invested in the situation. Tax Assessment Xperts Inc is a firm in your area that specializes in property tax settlements. Contact them for more information.