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Property Taxes Late-Payment Penalties: How to Avoid or Reduce Them

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Property tax is a type of tax that is paid by property owners on their properties, as one might imagine. It is calculated by a person’s local government, in the area that the property is located. The amount payable depends on where the property is located and how expensive it is.

You can usually find out how much your monthly or annual property tax payments are by contacting your local authority, although they will generally reach out to you first. You can also ask your estate agent if they know how much you will have to pay before buying a house.

In this article, we are going to explore how you can avoid or reduce late payment penalties:

Avoiding Penalties

The best way to avoid late payment penalties is to pay your property taxes on time or early. Depending on the state that you live in, you may have to pay monthly or annually. Your local government will send you a spreadsheet with a list of payment dates on when you first register with them. If you fail to make these payments, then you will fall into arrears.

Most people find it a lot less stressful to clear everything off at once. Instead of paying monthly, pay it all together in one lump sum and then you don’t have to worry about them for another year. However, if your property taxes are very high, then this might not be possible.

Property taxes are constantly increasing, which means that you need to stay on top of them so that you don’t end up having to pay more than you originally did.

Consequences of Arrears

If you do fall into arrears, then your local government will try to collect the money that you owe them. At first, they will send you reminder letters, which will be followed by warning letters. If you do not pay what you owe or contact them, they will begin sending debt enforcement agents to your house. If these attempts are ignored, then your tangible assets will be repossessed and you could be taken to court. In addition to your tangible assets being repossessed, you will incur more fines. The debt collection agents tasked with enforcing the government’s debt will add their own fees on top of what you already owe the government.

If you fall into arrears and don’t communicate with the government, then there’s not much that you can do. However, if you do communicate with them then you will more than likely be able to work out a payment plan.

Payment Plans

Payment plans are a good way to resolve your unpaid debts. According to the property tax specialists you can get a payment plan in place to help you to repay your property tax arrears, however far behind you are. You can get a payment plan that staggers the amount that you have to pay each month so that your property taxes are more affordable.

If you are in a lot of arrears, then your payment plans might start off high. You may also be asked to make an immediate payment. The government’s primary concern will be to clear off as much of your debt as possible in one go.

Types of Payment Plan

You will have several payment plan options available to you, depending on the state that you are in. One of the most common types of payment plans for property tax arrears is the five-year payment plan. The five-year plan is only available to taxpayers who have been in default for less than five years. People who are late on their current year payments cannot access this plan. The last day that you will be able to set up a five-year plan is the last business day of the fifth fiscal year after you defaulted on your taxes. Some states allow properties to be seized and sold at auction after this date.

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You can also get a current payment plan, which we mentioned earlier. This is a plan that will allow you to stagger your payments for the current year, to make them more affordable. These plans break down the amount that you have to pay annually into affordable monthly payments. If you already pay monthly, then you will still be able to break it down but the amount payable will spill over into the next fiscal year.

Starting a Payment Plan

Setting a payment plan up is very straightforward. All that you need to do is to contact your local government property tax office and explain to them that you are struggling to pay your taxes. They will then suggest a payment plan to you. If they don’t then you can suggest it to them. When you set your payment plan up, they will ask for an initial payment to be made. They will usually be flexible with this amount. It can be anything from $1 to $100 [or more].

Once your payment plan is set up, you will be expected to make every single payment. If you don’t adhere to your payment plan then you could default again. If you default a second time, you may still be able to arrange another payment plan but it will not be as flexible as your first one was.


In some states, when you default on your payment plan, you cannot restart it in the same fiscal year in which it defaulted. This means that debt will continue to accrue and interest will be added. This can leave you in a very bad financial position.

Financial Advice

If you are in debt and are constantly making bad financial decisions, then you need to speak to a financial advisor. There are charities that will coach you on how to look after your finances for free. You can also visit a paid financial advisor, who will look through your financial records extensively. If you don’t seek help with your finances when you are caught in a downward spiral, then things will only get worse. Don’t be ashamed to ask for help if you are struggling.

If your property taxes are in arrears, then you need to sort out a payment plan or pay everything in full. You can discuss everything mentioned here at length with your local government’s property tax office.