What Happens When You Fall Behind on Property Taxes?

What happens in general

When property taxes go unpaid, interest and penalties are added and the debt attaches to the property as a lien. States then use one of two main systems to collect. In tax lien states, investors buy the right to collect the debt plus interest and can eventually foreclose if it is not repaid. In tax deed states, the government sells the property itself after a set period. Some states use a combination.

How it works in Florida

• November: Tax bills are mailed. Paying early earns a discount of 4 percent in November, 3 percent in December, 2 percent in January, and 1 percent in February.
• March 31: The last day to pay the full amount before it becomes delinquent.
• April 1: Unpaid taxes become delinquent, and interest and fees begin to accrue.
• By June 1: The tax collector sells a tax certificate on the delinquent account. Investors bid on the interest rate they will accept, starting at 18 percent and bidding down. The certificate is a lien, not ownership.
• Redemption: You can pay off the certificate at any time before a tax deed is issued by paying the tax collector the taxes, interest, and fees.
• Two years later: If the certificate is not redeemed, the holder can apply for a tax deed once two years have passed from April 1 of the year the certificate was issued.
• Tax deed sale: The clerk holds a public auction. If the property sells, ownership passes to the winning bidder. Money left over after the debts are paid may be claimed by the former owner and lienholders, but the property itself is gone.

If you have a mortgage

If your mortgage payment includes an escrow account, your lender pays the taxes for you. If your loan does not have escrow and you fall behind on taxes, most mortgages treat that as a default, and the lender can pay the taxes, charge you for them, and require escrow going forward. Either way, the cost comes back to you through a higher payment or a larger balance.

Ways to catch up

• Pay the delinquent amount to the tax collector as soon as possible, since interest and fees keep growing.
• Ask your county tax collector which payment options are available to you.
• Make sure you receive every exemption you qualify for, such as Florida's homestead exemption and exemptions for eligible seniors, veterans, and people with disabilities.
• If you believe your assessed value is too high, Florida lets you petition the Value Adjustment Board, generally within 25 days after the TRIM notice is mailed in August.
• Talk with a HUD-approved housing counselor if you are also behind on your mortgage.

Selling a property with back taxes

You can sell a property that has unpaid taxes or an outstanding tax certificate. The title search shows what is owed, and the title company pays the delinquent taxes, interest, and fees from the sale proceeds at closing before you receive the balance. Selling before a tax deed sale protects equity you could otherwise lose.

If there is not enough time or money to catch up, a direct sale can close in a matter of weeks and pay off the taxes as part of closing.

Frequently asked questions

This guide is general information, not legal, tax, or financial advice. Laws change and every situation is different, so talk with a qualified professional about yours.