Owning property comes with responsibilities, and one of the most important is paying your property taxes on time. But sometimes you miss a bill or face financial hardship, and now you’re facing the consequences of unpaid taxes.
If you’re dealing with or trying to avoid a tax lien, this guide will walk you through the essential steps for managing and resolving issues with your back taxes on property.
In this article, we’ll break down
- What property back taxes are and how they work
- Steps you can take to fix the problem before it gets worse
- How can you avoid back taxes on property in the future
What are back taxes on property?
| When you don’t pay your property taxes on time, the amount you owe becomes back taxes on property (delinquent property tax). These unpaid taxes add up quickly and become a major financial problem. |
Every year, your local government checks how much your home is worth. Based on this value, they charge you property taxes. The money collected from your funds local schools, roads, police, fire departments, and other public services.
If you don’t pay, the tax authority will consider your account delinquent and add penalties and interest. Over time, this can lead to serious consequences like tax liens or even losing your property.
How are property taxes assessed?
Understanding how property taxes are calculated can help you plan and budget effectively.
Here’s a quick breakdown:
- Your local assessor estimates your property’s fair market value.
- The assessed value is multiplied by your city or county’s tax rate (millage rate).
- The result is your annual property tax bill.
Your property tax bill can be calculated using this formula: (Mill Rate x Taxable Property Value) / 1,000 = Property Tax For example, if your home is worth $250,000 and the local mill rate is 12, your property tax would be → (12 × $250,000) ÷ 1,000 = $3,000 per year. |
The frequency of these assessments varies significantly by state. For instance, Alaska conducts annual property assessments, Wyoming reassesses at least every 4 years with 2025 notices mailed April 28, and Alabama reassesses at least once every 3 years. Understanding your state’s schedule helps you anticipate when your tax bill might change.
Available Exemptions → States like Colorado offer homestead exemptions. Beginning with the 2025 property tax year, Colorado expanded the homestead exemption from 50 percent of the first $200,000 of actual value to the lesser of 50 percent of the actual value or 50 percent of the estimated state median home value. Dare County, North Carolina, offers up to $25,000 or 50% off home value for seniors 65+ and disabled individuals. |
What happens if you have back taxes on your property?
When you fall behind on your property taxes, the consequences can escalate quickly. Here’s a breakdown of what happens.
1. Interests, penalties, and fees
Once your property tax due date passes, penalties start accumulating. Local governments charge varying interest rates on unpaid balances.
The longer you wait, the more expensive it becomes to resolve taxes. Penalties may be higher if your property is considered non-owner-occupied or commercial.
The table below illustrates how some states handle interest, penalties, and fees on unpaid property taxes in detail:
| State | Interest Rate | Penalties | Additional Fees |
| California | Up to 18% annually (1.5% per month) | 10% penalty after tax delinquency | Limited administrative fees |
| Texas | 7% per year up to 12.5% (varies) | 5% penalty + 5% attorney fees | Additional fees for tax sales |
| Florida | 18% annually (1.5% per month) | 3% penalty in first month, 1.5% monthly thereafter | Some counties charge collection fees |
| New York | Varies by county, generally 1-2% monthly interest | 5% penalty after 30 days | Minimal administrative fees |
| Illinois | 1.5% per month interest | 1.5% penalty per month | Additional fees if the property goes to tax sale |
| Pennsylvania | 6% annually + 1% monthly interest | 10% penalty after 6 months | Fees for the sheriff’s sale and court costs |
2. Delinquency notices
Your local tax office will begin sending multiple notices via mail and, in some cases, publish your name in public tax delinquency lists.
These notices serve as warnings and are often required by law before further legal action can be taken.
3. Tax lien on your property
If your taxes remain unpaid, the county will place a legal claim called a tax lien on your home. This lien gives the government the right to collect the debt by forcing a sale of your property if necessary.
A recorded lien can also prevent you from refinancing or selling your home. If you ignore notices, they send you a final bill called a Notice and Demand for Payment.
4. Sale of tax lien certificates
In some states (like Florida, Arizona, and Georgia), local governments sell the debt to investors in the form of a tax lien certificate. The investor pays your tax bill and, in return, earns interest on what you owe them.
If you don’t repay the investor within the redemption period (the timeframe to repay tax debt, often in 1–3 years), the investor can move to claim ownership of your property. This process is legal and usually happens without a court hearing.
5. Tax lien foreclosure
If you still haven’t paid your balance, the local government or the lien certificate holder can initiate foreclosure proceedings.
This is the final step, where your property can be sold at a public auction. You may permanently lose your home, even if the unpaid taxes were just a fraction of your property’s value.
It’s important to note that some states use tax lien sales, while others use tax deed sales, where the property itself may be sold to satisfy the debt.
The table below shows which states generally use tax lien sales and which use tax deed sales:
| Sale Type | States |
| Tax Lien States | Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Oklahoma, South Carolina, South Dakota, Vermont, West Virginia, Wyoming |
| Tax Deed States | Alaska, Arkansas, California, Connecticut, Hawaii, Idaho, Kansas, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin |
Some states, like Florida, Massachusetts, Nevada, and New York, offer both tax lien and tax deed sales options.
How to pay off back taxes on property?
It might seem stressful to have back taxes on your property, but real solutions are available. Resolving back taxes on property is your best defense against liens and foreclosure.
Here’s how you can approach it methodically:
Contact your county tax office
Start by getting a full breakdown of what you owe.
Ask for:
- Principal tax amount
- Penalties and interest
- Administrative or legal fees
- Lien status (if any)
- Deadlines or auction dates
Also, ask about the next steps if you cannot pay in full.
Payment plans for back taxes
Most counties allow you to set up a payment plan. This spreads your debt over several months or years, so it’s easier to manage. It enables you to pay off your debt over 6 to 36 months.
You’ll need to:
- Contact your local tax office.
- Ask about tax payment plans.
- Agree to make regular payments until the full amount is paid.
Terms vary, but typically:
- A written agreement is required.
- You must stay current on current-year taxes.
- Missing a single payment may void your agreement and trigger lien action.
Tax relief programs and assistance
Many counties have hardship-based programs that forgive part of your tax, waive penalties, or defer payment.
These property tax relief programs are often available for you if you’re:
- Seniors (age 65+)
- Veterans
- Disabled individuals
- Low-income households
You’ll need to provide income documentation and proof of hardship.
You may be able to get:
- A reduction in your taxes
- Property tax deferral, which means your payment is delayed
- Forgiveness of some penalties or interest
Visit your local government’s website or speak to a tax advisor to learn what’s available in your area.
This isn’t a one-size-fits-all solution, but you might be shocked by how much help you can get.
Refinance or use home equity (if possible)
If you have equity in your home, refinancing may be an option to pay your taxes in full. However, tax liens can make refinancing harder.
A tax resolution expert can help remove or subordinate the lien temporarily to allow refinancing.
IRS back tax refund
You may not realize that federal and local tax systems don’t automatically sync, but if you’re owed a refund from the IRS, it could be used to help settle local property tax debt.
How do refund offsets work?
If your property taxes have been reported to the U.S. Treasury Offset Program, the IRS may automatically apply your refund toward the debt. But that only happens if your local government reports it.
How to apply refunds to property taxes?
Sometimes, if you overpaid on your federal taxes while owing back taxes on property, the IRS might hold your refund. You can request it by filing Form 843.
Form 843 is used to claim a refund or ask for a reduction in penalties and interest.
This can be helpful if:
- You were unfairly charged a penalty
- You can prove financial hardship
- You’ve already paid the back taxes on property and now qualify for a refund
You can use IRS Form 8379 if you’re an injured spouse.
If you’re owed a large refund and also owe local taxes, coordinating both sides can help avoid liens and penalties.
But this strategy should be guided by a tax advisor who understands how both the IRS and local authorities operate.
What to do if you can’t pay your back taxes on property?
If you’re deep in debt, you still have options, but you must act quickly.
Sell your property to clear back taxes
One way out is selling your home before a lien is levied. This helps you avoid a tax lien foreclosure and protects your credit.
If you have equity, you can use the money to:
- Pay off your delinquent property taxes
- Clear up other debts
- Start fresh with a smaller home or rental
If your back taxes on property are small, consider borrowing against your home to pay them off. However, be cautious—taking on more debt isn’t always the best solution.
You Might Want to Read → Tax Rules for Selling Inherited Property
Negotiating a tax settlement
You can negotiate a smaller payment with your tax office. This is called an Offer in Compromise.
Not all counties allow this, but counties like St. Charles County, Missouri, offer specific hardship programs; their Senior Real Estate Property Tax Relief program helps residents 62+ years old with property tax relief, and Dare County, North Carolina, offers multiple programs for seniors, disabled individuals, and veterans.
But if the IRS is involved in your property debt (such as from prior income tax liens), you may qualify for an Offer in Compromise.
To qualify, you’ll need to show that:
- You can’t afford to pay the full amount
- You’ve made an honest effort to pay
- Your assets can’t cover the debt
- The collection would cause financial hardship
- You’re willing to stick to an agreed plan
Consult a tax resolution expert
If you’re overwhelmed or facing a lien or auction, Focus CPA can help.
We know how to:
- Stop a lien sale
- Negotiate for lower payments
- Handle IRS offset coordination
- Represent you before local boards
Think Focus CPA can help you? → Get A Consultation Today!
How to avoid back taxes on property in the future?
Being proactive is the best way to prevent problems with your back taxes on property.
Below are key strategies to help you avoid unpaid property taxes:
Set up a mortgage escrow
A mortgage escrow account is one of the simplest ways to ensure your property taxes are always paid on time. This system automates your payments and reduces the risk of delinquency.
Here’s how a mortgage escrow works:
- Your lender collects a portion of property taxes with each monthly mortgage payment.
- The lender is responsible for submitting tax payments directly to the county.
- You avoid missed due dates or late fees automatically.
- You receive annual escrow statements to track changes in tax amounts.
If you’re refinancing or buying a home, ask your lender to include tax escrow in your agreement.
Check your tax assessment annually
Your property tax bill is based on your home’s assessed value. If your assessment is too high, you’re likely paying too much in taxes, increasing your risk of falling behind.
Here’s how to review and challenge your tax assessment:
- Review the assessed value of your property every year when the notice arrives.
- Compare your home’s value to similar homes in your neighborhood.
- Look for errors like incorrect square footage, outdated renovations, or zoning changes.
- File a formal appeal or request for reassessment if your valuation seems too high.
- Submit your appeal by the annual deadline, usually 30–60 days after receiving the notice.
Winning an appeal can reduce your tax bill and your risk of ending up with delinquent property taxes.
Monitor your tax bill even without a mortgage
You may forget that once you pay off your mortgage, you become directly responsible for paying your own taxes.
To avoid missing payments after your loan is paid off:
- Sign up for email or text notifications from your local tax collector’s website.
- Set up your own tax payment system with reminders and budgeted savings.
- Visit your local tax assessor’s site annually to review your property tax status.
- Ensure your mailing address is up to date with the tax office so you receive your bill.
- Enroll in automatic bank payments if your county offers them.
You might become delinquent simply because you never receive a bill or forget to pay without an escrow.
Apply for future relief in advance
Waiting until you’re already behind makes it harder to fix the problem. Instead, plan ahead and apply for relief early, especially if you anticipate financial hardship.
Proactive steps to seek tax relief:
- Check your county’s website for property tax relief programs you may qualify for (age, income, disability, veteran status, etc.).
- Apply before you fall behind; most programs don’t apply retroactively.
- Submit all required income and ownership documentation.
- Reapply annually or whenever your financial situation changes.
By applying early, you can reduce your total tax burden and avoid triggering a tax lien foreclosure.
Budget for property taxes
Treat your property taxes like a monthly bill.
- Divide your total yearly tax by 12 and save that amount each month
- Create an auto-transfer to a dedicated savings account
This prevents lump-sum stress when your taxes are due.
Take action now to protect your property with Focus CPA
Falling behind on back taxes on property is a legal risk that could cost you your home, but the right help makes all the difference.
Choose Focus CPA if you want professional, efficient, and reliable assistance.
Here’s how we’ve got your back:
- We dig deep into your tax records to uncover every issue
- Handle IRS and local tax authorities directly, so you don’t have to
- Create a clear plan to resolve back taxes and prevent future liens
- Offer smart advice to protect your property and credit
- Keep everything confidential, professional, and pressure-free
Whether you’re stuck in property tax delinquency or facing a tax lien certificate sale, we take care of the hard part by quickly preserving your rights and securing your property. Contact Focus CPA today.
The timeline varies by state and county. Generally, you have 1-3 years from the initial delinquency before foreclosure proceedings begin, but some areas move faster.
Focus CPA can help you understand your specific timeline and protect your property, whether you're facing federal IRS auctions or state/county tax foreclosure proceedings.
Unpaid property taxes don’t directly affect your credit score because local governments typically don’t report to credit bureaus. However, if the tax lien is sold or turned into a judgment, third-party collectors may report it, impacting your score.
Tax liens also show up in public records, which lenders may review. Additionally, unpaid taxes can block refinancing or home equity loans.
When you die, your unpaid property taxes become part of your estate's debts and must be paid before your heirs receive ownership. If ignored, the county can still place or enforce a tax lien and even foreclose.
Your estate's executor is responsible for settling your taxes. If your property transfers through probate, your heirs inherit both the asset and the liability. Your heirs should check the tax status early in the inheritance process.
As a landlord, you are always responsible for property taxes, not your tenants, since the tax is tied to property ownership.
However, in commercial leases, you can pass tax costs to your tenants through 'triple net leases.”
Tenants cannot legally be liable for unpaid taxes unless a written agreement says so.
If you're a residential renter, you typically have no tax liability for the home you occupy.
Not always. Property tax liens are secured debts, which means they often survive bankruptcy even if the personal obligation is discharged.
Chapter 7 bankruptcy may discharge your liability, but the lien can still remain attached to the property.
In Chapter 13, you can pay taxes over time through a repayment plan.
Consult a bankruptcy attorney to understand how local tax laws apply in your state.
