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Can I Lose My Home Because of Overdue Property Taxes?

Missing mortgage payments isn’t the only way you can lose your home. Falling behind on your property taxes – no matter whether you owe thousands or just a few hundred dollars – also puts you at risk of foreclosure.

In fact, tax lien foreclosures take place every day in America. When you don’t pay property taxes you owe, your city or county has the legal right to put a high-priority tax lien on your property in the amount of the past due taxes, plus interest and penalties.

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After a set period of time – typically anywhere from six months to two years, depending on where you live – if your taxes are still unpaid the taxing authority’s tax lien gives them the right to foreclose on your property. Your home then gets sold at an auction to anyone willing to pay off the back taxes due. Lots of investors buy “tax lien certificates” in the hopes of getting a home in tax foreclosure. For these investors, it’s a way for them to purchase a home at a fraction of its value – without even having to pay off the mortgage due on the house.

Property Tax Delinquency Can Lead to Foreclosure

The number one reason people become delinquent on their property taxes is because these taxes can run into the thousands, driving up the cost of homeownership considerably. Some lenders want you to add your property taxes into the monthly mortgage payment you make – to be sure those payments get paid on time. So if the principal and interest on your mortgage totals $2,000 per month and your annual property tax bill is $2,400, that’s an additional $200 a month tacked onto your payment.

Check out the taxes paid in the following 9 states, which have the highest property taxes in the country. You’ll notice that the top five states with the biggest tax bills are all located in the Northeast. However, even Midwest states, such as Illinois, and Western states, like California, make the list.

State / Median Property Tax

1. New Jersey $5,352

2. New Hampshire $3,920

3. Connecticut $3,865

4. New York $,3076

5. Massachusetts $2,974

6. Illinois $2,904

7. Vermont $2,835

8. Wisconsin $2,777

9. California $2,278

Source: Census Bureau, Tax Foundation
Fortunately, even if you live in a community with high property taxes, there are some smart ways to go about lessening your tax burden – and subsequently keeping your home.

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