Real estate properties can be valid long-term investments, but they also come with some major expenses - most notably, property taxes. Depending on where you live, you’ll usually have to pay property taxes once or twice a year. But what happens if you pay your property taxes late?
There are penalties associated with paying your property taxes past their due date, and they can vary slightly from state to state. While it may not seem like a big deal to miss the due date for property taxes, this can have serious financial repercussions. Here’s what you need to know about property tax schedules and late payment penalties.
When Are Property Taxes Due?
Property taxes are due either once or twice per year, depending on where you live. Property taxes are normally handled through your state or local government, and you will be sent a tax bill in the mail several weeks before the due date. The due date for your property taxes will be marked clearly on the bill.
What Happens if You Pay Property Taxes Late?
Financial penalties for paying property taxes late vary by location. The government usually adds a fee to your tax bill, even if it is one day late, and these fees get larger the longer you wait.
For example, Illinois imposes a 1.5 percent penalty per month for late payments. New York charges interest on all late payments, with the interest rate varying based on your property's assessed value. This interest rate starts at 3 percent and can go as high as 13 percent.
The amount you’ll pay in late fees and the fee structure depend on where you live. Check with your local or state government to see how they assess fees. You’ll want to make sure you understand these requirements well before property taxes are due to avoid unpleasant financial surprises.
There may be instances where paying your property taxes a day or two late isn’t a big deal, especially if you manage a large portfolio. However, it’s very important not to let your property tax bill get delinquent, which can have much more serious consequences.
What Happens if you Don't Pay Property Taxes at all?
At a certain point, your property taxes will be considered delinquent if you don’t pay them. At this point, your state and local government can take further action against you. The time period in which your taxes become delinquent varies by state, but is usually somewhere between six weeks and four months. At this point, you will be charged additional late fees and administrative fees. This can make your tax bill much higher than it was originally.
If you let your taxes go unpaid for years, the government can foreclose on your home. In California, this usually occurs after a period of five years, although it can happen sooner. In most states, you can stop this foreclosure by paying your entire bill in full.
Paying your property taxes on schedule is an important responsibility for any owner. The financial consequences of paying your taxes late can add up quickly, which is why it’s essential to stay on top of your due dates.
This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.
