City and County Tax
One of the pitfalls of living in the city of Memphis is paying double property tax. In Memphis, we pay both the City of Memphis Property Tax and Shelby County Property Tax. Typically, our mortgage company adds this to our monthly payment amount along with your homeowners’ insurance, this is called “escrow”. However, if you do not have a mortgage or choose to pay your property tax separately it can be easy to forget to pay. My hope is these blog posts will help better inform you of your options should you owe back taxes.
When you do not pay your property tax you will be penalized with late fees and interest, and these numbers can add up! When homeowners don’t pay their property taxes, the overdue amount becomes a lien on the property. When homeowners do not pay their taxes a Lien is placed on the property. A lien is a claim against your property to ensure you’ll pay the debt; it effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes. Accordingly, in Tennessee, your property can be sold at a tax sale to pay off the delinquent tax bill. The county will file a tax lawsuit in court and then sell the property at a tax sale, which is a public auction, to satisfy the tax lien. (Tenn. Code Ann. § 67-5-2501). But the winning bidder from the sale can’t get ownership of your home right away; you’ll get some time to get caught up on the overdue amounts before that happens. If you don’t pay off the debt during what’s called a “redemption period” after the sale, though, you’ll lose the property permanently. What can you do to avoid going to tax sale?? In many cases, you can call the trustee’s office and work out a payment plan to get current on your tax. This should be your first option if you would like to keep the property. If getting on a payment plan does not suit your current financial situation there are still other options. 1. You can sell us your property! We will buy your property and pay off the tax lien! There a huge benefits to this. First and foremost, you don’t lose all the equity you have worked so hard to build in your house. Also, in selling to us, you chose the closing date and when you would like to move out, and depending on the situation you can likely sell to us and walk away with plenty of money to start a life. 2. Let the property go to tax sale. This is the last resort and worst-case scenario. At a tax sale, you lose your home and all the equity you have built. This will also impact your credit tremendously and make it difficult to find a new home. We hope this blog post was helpful, and if you ever have any real estate questions. Please reach out, we would love the opportunity to help.
All the best- Ben