If you missed a few property tax payments for your home in Pennsylvania, you may face Pennsylvania property tax liens. Any overdue payments for your property taxes become a lien on your property.
A lien on your home either forces you to pay the overdue debt or uses the house as collateral for your debt. Essentially, you could lose your home by failing to pay property taxes and facing Pennsylvania property tax liens.
Yet, in this guide, you will learn about the Pennsylvania property tax system and tax liens. Here, you can read all about personal liability for Pennsylvania property tax liens, as well as what can happen if you fail to pay your property taxes. This guide will teach you everything you need to do to avoid property tax liens and make sure you keep your home. Now let’s get started!
The Pennsylvania Property Tax System Overview
Like the other 49 states, property owners are responsible for paying their real estate tax and all property taxes in Pennsylvania. Yet, how are property taxes calculated? Many of these taxes are based on the land value and the cost of all structures or buildings.
The assessment for land tends to be higher when water, sewer, and gas are present on the property. Furthermore, tax assessors will analyze the value of your property every one to five years. Then, the property owner needs to pay whatever changes the assessors made to the property taxes.
The assessors also calculated the tax rates or levies in each area independently. Furthermore, every school district, city, or county has the authority to levy taxes against the homes and properties in their districts.
There are three specific strategies used to examine property value, which include:
- Conducting a sales evaluation
- The cost process
- The income method
The tax assessor conducts a sales evaluation by checking comparable property sales in your region. The cost process involves the assessor figuring out how much it would cost to replace a property. Lastly, the income method includes outlining how much income a homeowner can make from renting out the property.
The property owner will need to pay whatever property tax the taxing authorities determine.
Pennsylvania Property Tax Liens
You will need to cover and pay any delinquent taxes before you face municipal liens. In particular, a delinquent taxpayer who has not paid delinquent property taxes will have their house used as collateral. Yet, they may work with tax collectors to pay back their delinquent real estate taxes through installments.
A tax lien is usually categorized in three separate sections:
- Common-law liens
- Statutory liens
- Consensual liens
You can consider any tax liens created via the Internal Revenue Code as statutory liens. The government bases a general tax lien as a primary federal tax levy. A federal tax lien can occur whenever the government notifies a person that they have to pay a federal tax, but they fail to pay said tax.
The IRS tends to have up to 10 years to collect the tax liability on a Pennsylvania property. Yet, there may be circumstances that allow the IRS more time to collect on a current tax lien.
Furthermore, Pennsylvania’s real estate tax sale law governs the property tax sales in this state. If you failed to pay all of your property taxes and are behind in these payments, the government may put your house up for sale at an upset tax sale.
Whenever a property does not sell at the upset tax sale, the government entity can sell the house at a judicial sale. If that doesn’t work and the upset sale fails, unsold properties are put on the repository sale list.
Personal Liability for Property Tax Liens in Pennsylvania
Essentially, the average homeowner in Pennsylvania pays a tax rate of 1.58 percent of their house’s value. This is the 11th highest property tax in the nation. These taxes are collected for public education and other public services like libraries, law enforcement, roads, and construction.
Yet, the fact that the overall property taxes are high may lead to higher numbers of unpaid taxes throughout the state. For example, the annual rate on a median-priced house is $2,691 in Pennsylvania.
You’ll need to make sure to pay property taxes by March 31st each year if you are a homeowner in Pennsylvania. If you pay the property tax on or before the last day of February, you will receive a 1 percent discount.
However, delinquent taxpayers can pay off the amounts they owe to keep the home even if property tax liens were levied against their house. In case of a tax sale, the prior owner can keep their home by paying the buyer the amount paid or covering the unpaid taxes with interest.
Before a notice of sale, you can attempt to pay off those unpaid taxes via money order. You should also be aware that property tax liens tend to have priority over other types of liens, including deeds of trust liens and mortgage liens.
What Happens if You Don’t Pay Property Taxes in Pennsylvania
As previously mentioned, in Pennsylvania, when you don’t pay your property taxes, your home may face a property tax lien and be put up for an upset tax sale. Unsold properties are then put on a judicial tax sale, and if that doesn’t work, they are put on the repository list.
If you were able to cover your back taxes and got the lien removed, that information is public and credit bureau agencies can gather this information. Yet, if you satisfied your lien, you can send a copy of the lien satisfaction notice to credit bureaus and request that they remove the lien from your credit report.
If you cannot cover the large costs of owning a home any longer, whether that’s the monthly mortgage costs or property taxes, you may want to contact cash home buyers Philadelphia.
Before you move forward with any sales, you should create a list of questions to ask before selling a house. For example, you’ll want to learn what season is best and when to sell your house. Luckily, we buy houses Pennsylvania and can answer all your questions.
Yet, if paying property taxes is something you can handle, you’ll want to set up payment for these real estate taxes through escrow. Your mortgage statement should also outline how much your property taxes are and whether you’re paying them on time.
You want to make sure you’re paying the right amount and not too little or too much. You’ll want to calculate your overall property tax and whether you are eligible for a federal real estate tax deduction.
If you have more questions about Pennsylvania property taxes, real estate taxes, and other fees, you should speak with a financial tax professional.
After reading this guide, you should have a strong understanding of the Pennsylvania property tax system, as well as what happens if you did not pay all of your property taxes. You should now know about the type of situations when your home could be sold after tax collectors levy a property tax lien against your house.
However, tax collectors will allow you to pay back any missing property taxes. Generally, you’ll need to pay these rates by March 31st each year. Yet, if the costs of owning a home have become too much, you may want to work with a cash home buyer to sell your property and cover all debts.