If you fail to pay your property taxes, you could lose your home to a tax sale or foreclosure.
Mounting debt leads to more financial stress, possible foreclosure
Here's what happens if you don't pay property taxes on your home; the delinquent amount becomes a lien on the home. Even if you have a reverse mortgage or are eligible for property tax exemptions, you must still pay your taxes or file annual exemptions.
Each year, the Department of Finance sells the liens of properties that have unpaid debts — including property taxes, water bills, and other charges.
Once a tax lien is sold, a third-party collection agency can add fees and high interest of up to 18%, compounded daily. This will no doubt be an increased financial burden if you're already behind on other bills and ultimately force some homeowners into foreclosure.
How the lien sale works
There will first be notifications sent out to you by The New York City Department of Finance that your unpaid tax and water debts will be sold within a 90-day period.
Even if you do not receive a notice, you may still be on the sale list – and not receiving the notice does not excuse you from the lien sale.
It is possible that a foreclosure can be initiated as little as six months after the sale, if the interest on the debt remains unpaid and no payment plan is initiated. It's often quicker to file a foreclosure for an unpaid lien than it is for an unpaid mortgage.
If you are behind on both your mortgage and taxes, contact your mortgage company to discuss how to resolve the lien.
You have options
If you are a homeowner and owe property tax or water/sewer payments, or have had emergency repairs made by the City, you may be at risk of having your lien sold. The good news is that there are many ways to get off the lien sale list.
Know if you are at risk:
For 1-3 family homes, a tax lien is sold if a homeowner has sustained a debt of at least $1,000 for over three years.
For 2-3 family homes, a water or sewer lien of at least $2,000 will also be sold if it has been due for over a year.
Get off the sale list:
Pay your outstanding tax lien charges in full to the Department of Finance or water lien charges to Department of Environmental Protection.
Enter into a no money down payment plan that can break down your lien into smaller payments over a period of up to 10 years.
Apply for an exemption. Exemptions are available for qualifying seniors, people with disabilities, veterans, and those on active military duty.
Defer paying your property taxes with the Department's Property Tax and Interest Deferral (PT AID) Program.
A full guide to the lien sale list for homeowners, including how to get off the lien sale list, can be found here.
Talk to a tax lawyer:
The law surrounding failure to pay your property taxes is complicated and varies from state to state. You may want to contact a local tax lawyer.
Contact us today for a list of pre-vetted New York State tax lawyers who can tell you about your rights and what options you might have to avoid losing your home.
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