What happens to your home if you don’t pay the taxes? Can I actually lose my home? If you own a lot and don’t pay the taxes what happens? Want the answer? How many years can I be delinquent in paying my taxes? Read more…….
Taxes here are mailed out in November and are paid in arrears, not ahead. You have several month’s to pay those property taxes up until May 1st of the next year. So what happens if you cant or don’t make that deadline?
If you cant meet the deadline, your tax bill will be put up for auction. Tons of investors enroll in the annual tax certificate sale every year, in the hopes of obtaining a better interest rate return on their money than other options like CD’s or money market accounts.
Here is the process:
The bidding for tax payment works in a reverse order. The first bidder will offer to pay the tax bill on a property, in exchange for the maximum interest rate of 18%. Other bidders then can bid on the same tax bill, and will offer to accept a lower interest rate. This bidding process continues until the lowest offer for the interest rate is accepted. A bidder may drop out at any time. For example if the low bid is 0% that investor would receive no interest income on the certificate…..so the minimum interest income to the investor is set at 5%.
So, if someone pays your tax bill on your behalf, and the winning bid is 18%, that investor will be entitled to 18% per year in interest on the amount paid for the tax until the tax certificate is redeemed or paid off. If the tax certificate is not paid in 2 years, that holder may apply for a tax deed on the property triggering a forced sale at auction. Once the property has sold the holder of the tax certificate is paid in full plus interest from the sale proceeds.
In this market, a pay back of potentially 18% return on your money is a big incentive for an investor. Most homeowners believe that since Florida offers a homestead exemption, it guarantees protection from all creditors….that is not the case with local and state taxes. If you decide to sell the property with delinquent tax bills, those taxes will come off the top of any proceeds from that sale.
It is not in your best interest to ignore your property taxes. You stand to lose any equity you might have built up over the years. If you feel this may be necessary you should seek professional counsel.