What Are Property Taxes?
Property taxes are taxes paid on land and buildings. These taxes are primarily levied by local governments, so property tax rates vary widely throughout the country.
Municipalities calculate property taxes in roughly the same way, although the exact numbers differ from place to place. The amount of tax owed on a property is calculated by assessing the property’s value and applying the tax rate (called a millage rate for property taxes). The property tax owed is what’s left after deducting any exemptions the property qualifies for.
Typically, local tax collectors calculate property taxes and send a bill to homeowners each year, though when exactly you’ll receive your tax bill depends on where you live.
When Should You Pay Your Property Taxes?
The exact timeline for paying property taxes varies based on location, but generally these taxes are paid in advance once or twice a year. March 1 and Sept. 1 are common due dates for property taxes. This means that on a semiannual pay schedule, the March 1 payment pays for March through August, and the September payment pays taxes from September through February.
If you’ve just purchased a new house, you’ll be required to put into escrow your first 12 or 13 months of property taxes on that home. Putting it in escrow means your lender will place the money for your property taxes in a special type of account until it comes time to pay the taxes.
How to File Property Taxes
Generally, there are two ways to file and pay your property taxes. Many mortgage lenders will factor your property taxes into your monthly mortgage payment. This is part of what’s known as a PITI payment, where homeowners make a payment each month that includes the principal, interest, taxes, and insurance associated with their mortgage.
If you’re just paying your principal and interest each month, or if you’ve already paid off your mortgage, you can pay property taxes through your local tax authority. Each county and state has its own process for collecting taxes, so it’s important to look up your county’s tax collector to find out how to pay property taxes where you live.
To give you an idea of how paying property taxes can work, let’s look at two examples:
Paying Property Taxes in Palm Beach, Florida
If you live in Palm Beach County, Florida, for example, your property taxes are due once a year, and you can pay them between Nov. 1 and March 31. You can view and pay your bill online through the county tax collector’s website. You can also pay taxes by mailing a check to the tax collector’s office or dropping the payment off at the office.
Palm Beach County also provides installment payment plans to make paying property taxes easier on homeowners’ budgets. If taxpayers sign up for this plan, they can pay their annual property taxes in four smaller installments in June, September, December and March, rather than one large payment.
The county also offers discounts of up to 4% off your property tax bill when you pay early. The earlier you pay, the greater the discount will be.
If you’re eligible for an exemption such as the homestead exemption, you must apply for the exemption through the county property appraiser’s website.
Paying Property Taxes in Orange County, California
Homeowners in Orange County, California can expect to receive their property tax bills in September or October through the mail. You can also view your tax bill online.
In the state of California, real estate property taxes are known as secured property taxes, and these taxes are collected twice a year on Nov. 1 and Feb. 1. You can pay the full amount before the first deadline in November if you wish.
Orange County homeowners can pay property taxes online or in person with cash, check or credit/debit card at the Treasurer-Tax Collector’s office.
If you get your property tax bill and feel that it’s unfairly high, you may be able to appeal the assessment of your property to lower the amount of tax you owe.
What Happens if You Don’t Pay Your Property Taxes?
There can be serious consequences if you don’t pay your property taxes. The local tax collector can put a lien on your home, which means the government has a legal claim on the property and you cannot sell it until you pay back your tax debt. Owing tax debt can also make it harder to get a mortgage, as lenders can perform a public records search to find out if you owe taxes.
If a homeowner still does not pay their property taxes after a lien has been placed, the tax authority may hold a tax sale. There are two types of tax sales that can occur: tax deed sales and tax lien certificate sales.
When a tax authority holds a tax deed sale, they sell the property outright. The purchaser receives a deed to the property, meaning the homeowner who didn’t pay taxes loses their home.
A tax lien certificate sale means that the tax authority sells their lien and therefore, their claim on the property tax debt. The purchaser can then collect the tax debt, and if the delinquent payments aren’t made, the purchaser can foreclose or convert the lien certificate to a deed to gain ownership to the property.
In some states, it is possible to “redeem” a home after a tax sale has taken place. Usually, the homeowner is required to pay the buyer the amount the buyer paid in the sale, plus interest, within a certain time frame.