While property taxes are usually collected by a county tax collector, the rules are most often written at the state level and apply statewide, sometimes allowing local governments to opt in or out of limited aspects of the legislation. Every state has different rates and due dates. About half of all states allow homeowners to delay or defer paying taxes without penalty. In some states, deferrals are implemented through a grace period granted to everyone. In others, some segments of the population, such as seniors or low-income taxpayers, are allowed to defer paying taxes for either specific or open-ended time frames.
Ramifications of a Due Date
Property taxes are generally due yearly, semiannually or on some other periodic basis over the year. Texas property taxes are due in one lump sum at the beginning of the year. California taxes are split into two equal installments -- one due in winter and one due in spring. Your tax bill will clearly state the due date and will also indicate the date after which penalties apply. In most states, penalties start the day after the due date. In others, the due date is followed by a grace period that ends with a delinquency date. Anything paid after the delinquency date is subject to penalties. In California, for instance, the winter due date is November 10th and the delinquency date is December 10th; the spring due date is Feb. 1 and the delinquency date is April 10th.
In a deferral program, certain homeowners either do not have to pay all their property tax or any property tax as long as they meet program criteria and live in their homes. The unpaid tax is collected when they cease to meet eligibility criteria. Often this doesn't happen until they die; the property tax is then repaid at sale. In Minnesota, for instance, taxpayers whose total household income is $60,000 or less can participate in a deferral program that requires them to pay 3 percent of their income toward property tax. The state pays the local government the balance due on the tax to the local community and places a lien on the property for the balance.
After the Grace Period
When a grace period or deferral period ends, or after the due date if there is no grace period or deferral, every state charges penalties, late fees or both. Often, the fees increase each month the property tax remains unpaid. Penalties and fees are often a percentage of the unpaid tax. In California, local communities impose a 10 percent penalty and a 1.5 percent late fee each month. In Michigan, each community has a different fee.
After some period, the local tax collector can auction your house to repay unpaid property taxes. The time frames vary from place to place. The auction occurs in Michigan in March of the third year taxes remain overdue. In California, the taxpayer has five years to pay up before the property is sold.