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While property tax delinquencies have declined in the last few years, the United States is still faced with approximately $11.8 billion in unpaid property taxes. Each year, $3–5 billion in delinquent real estate taxes are offered for public sale. In a tax-sale state, delinquent taxes can be sold as quickly as within six months.
Even in an upswing market, these are serious numbers, and investors must be vigilant to protect their assets. Delinquent and sold reporting is best monitored with real-time, accurate, and detailed information regarding delinquent and sold tax liabilities.
First and foremost, you must have a firm grasp of the state-specific tax foreclosure and sale regulations. An investor must discern if the delinquent asset is facing a tax sale or a tax deed sale. In a tax-sale state, the asset can go to sale anywhere between six months to a year, and there is typically a redemption period for the owner before the loss of the property once taxes have been sold. A tax-deed state is a bit more generous and can take about three years, but they do not offer a redemption period once the property has been sold. Every state has its own specific rules, and the 50 states are comprised of over 26,000 taxing agencies. Risk is real but can be minimized with the expertise and knowledgeable assistance of a professional property tax service firm. It is imperative that any tax-service provider report the next critical date and actions that can be taken. There can be multiple payoff amounts, monthly penalty and interest charges, and loss-of-property dates. A strong and knowledgeable provider can assist with redemption and payments as well as third-party buyer negotiations.
Strong portfolio management is also key to comprehending risk and exposure to unpaid taxes. Once again, seek guidance from the experts. With the right real estate tax provider, customer service and portfolio management will be of utmost importance. Find a company that will provide personalized and flexible service to fit your portfolio. Current as well as delinquent and sold taxes must be monitored daily. At a minimum, it is advisable to implement a tax-status update process and have comprehensive reporting available on a timely basis. Be certain that payment support is available at all levels to meet deadlines and deter additional penalties.
