If you are a homeowner who is falling behind on your real estate taxes, you may end up facing foreclosure on your property. Because your property taxes hinge on the value of your property, you may find your taxes rising beyond what you can afford. Before your situation becomes more serious, be sure to educate yourself. Get a better understanding of the laws regarding tax foreclosure – as well as where you can turn to get help.
Tax relief is available in many states, but you have to know how and where to access it. In some cases, you must apply for these tax exemptions, and meeting application deadlines is key. Many older adults remain unaware of such tax break opportunities. In fact, low-income senior homeowners are among those who, historically, have encountered challenges accessing tax relief.
One organization raising awareness regarding property tax relief for seniors is the National Center on Law and Elder Rights. In an FAQ resource and webinar on preventing tax foreclosures, it addresses points essential for advocates of older homeowners. Continue reading for some of the highlights that all senior homeowners should know.
Property Tax Foreclosure Laws
Tax foreclosure laws in each state permit liens against real estate, unpaid taxes, as well as property sales to collect on liens. These laws vary in each state, but there are similarities. In general, states assess taxes based on estimated property value, and tax bills are due annually.
If you fail to pay your property tax bills on time, your property could be subject to a tax lien. By placing a lien on your home, the government is in essence securing your home as collateral. This then allows the tax collector to auction or sell your home, if necessary, to pay off your tax debt.
Homeowners do have options to stop the tax sale process at different stages. Yet the most at-risk homeowners may need the help of an advocate right away. They frequently don’t understand what actions they need to take until it’s too late.
Why Are Older Adults at Risk?
Lenders normally insist that homeowners pay their real estate taxes through an escrow account. This helps the property owner set aside the funds monthly, prior to the annual tax bill due date. In many cases, older homeowners no longer have mortgages on their homes. If they are on a fixed or limited income and don’t budget for the funds, they may have trouble making the payment.
This is why many seniors who own their homes commonly end up in the tax foreclosure process.
Increasing Homeowners’ Ability to Afford Property Taxes
With the help of an advocate, you can potentially steer clear of the risks of tax foreclosure in several ways:
- Questioning the property value assessment
- Seeking available tax abatements, exemptions, or discounts
- Contesting tax lien enforcement or property foreclosure
- Attempting to recover a property after a tax sale
Preventing overwhelming debt is the best approach to avoiding a tax sale. If a home valuation is too high, the tax assessment may be inaccurate. As mentioned above, you can in fact appeal the valuation. (Check out this AARP story featuring how one advocate assists homeowners in his community file these kinds of appeals.)
In some states, seniors are eligible for a tax exemption or abatement program that can lower their property taxes. Advocates can help homeowners understand their rights, learn about all available tax relief programs, and apply for relief.
Recent Supreme Court Ruling Regarding Tax Foreclosure Laws
In a case decided by the Supreme Court in 2023, a senior homeowner in Minnesota lost out on funds when her foreclosed home sold. Although the sale of her home paid off her property tax debt, the county did not give her any of the surplus funds from the sale.
The court ruled that the government could not foreclose on the woman's property and keep her home equity after paying off her tax debt. This could, the court stated, also apply in situations where a private purchaser buys a tax lien. As this means that homeowners have a right to receive any surplus equity, many states will need to revise their tax foreclosure laws.
States also must give proper notice to property owners and other parties interested in the property. This way, they have sufficient time to take necessary action, including contesting the foreclosure or fulfilling their tax debt.
Heirs at Risk of Property Tax Foreclosure
Per the National Center on Law and Elder Rights, heirs who inherit their family home may be at high risk for property tax foreclosure. However, they, too, are eligible to apply for available tax relief. Be sure to research programs in your state to understand what discounts and exemptions you may be able to access. Consider seeking out the help of a professional advocate or elder law attorney to assist you.
Tax Relief Resources
For senior homeowners, property tax liens and foreclosures can take away their ability to:
- age in place,
- benefit from the equity in their home, and
- pass wealth on to their loved ones.
Nationwide, community engagement organizations seek to protect older homeowners from losing their homes to property tax foreclosure. Elder abuse scams threatening tax foreclosures also pose a risk to seniors.
A variety of tax relief programs exist to assist homeowners who are having trouble affording their household-related expenses. For example, many cities offer some kind of tax relief program for senior homeowners and other populations. Additional resources, such as the following, may also benefit you:
- Homeowner Assistance Fund. This federal program, established in 2021, helps homeowners facing financial strain as a result of the COVID-19 pandemic. Find support through this program in your state.
- Foreclosure Prevention Housing Counseling. Through the U.S. Department of Housing and Urban Development (HUD), you can seek the help of certified housing counselors. These individuals can help you understand, prepare for, and potentially avoid the foreclosure process. Search for a HUD housing counselor near you.
- Retiree Tax Map. Kiplinger's offers a free nationwide guide outlining what tax credit programs may be available to retirees in each state.
In addition, elder law attorneys can ensure seniors are able to hold onto their homes. If you or a loved one is facing a property tax lien or foreclosure, contact a local elder law attorney. They are familiar with state laws and programs that benefit seniors and can move quickly to help you get tax relief.
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