Are you 65 or older or disabled and considering a property tax loan?
Many Texas residents contact us considering a property tax loan to help with delinquent property taxes and have no idea they may qualify for a deferral program by the state of Texas. As standard practice, we always advise our clients of their rights to a deferral and have decided to write this blog as a guide.
Texas property tax deferral program for 65 or over and disabled homeowners.
Section 33.06 under the Texas Property Tax Code allows homeowners who are 65 or older or disabled to postpone paying property taxes on their homestead for as long as they own and reside in their home. To apply for a deferral of property taxes, Form 50-126, must be completed and returned to the Central Appraisal District in the county in which your property is located.
When do you qualify, and should you postpone paying your property taxes?
If you are a homeowner age 65 or over or disabled, you can defer or postpone paying delinquent property taxes on your homestead for as long as you own it and live in it. While entering the deferral program may be a good idea, remember that this program only defers payment; it does NOT cancel the obligation. Interest is added at the rate of 5% annually. Once you no longer own your home or live in it, all the taxes, penalties, and interest become due after 180 days. This can be a real problem for two reasons. One, the compounded interest at 5% can eat up any equity in your home very quickly – especially if no payments are made to reduce the unpaid and accruing balance. Two, after the 180-day period, the taxing entities will want all unpaid taxes, penalties, and interest to be paid in full, and if these remain unpaid, the collection efforts from the taxing entities can be severe… including a tax lawsuit and foreclosure.
When can someone 65 or older or disabled not defer their property taxes?
This program is only offered for homesteads where you own the property and reside there. This program is not available for rental or commercial properties. A property tax loan may still be your best option for these types of properties.
Also, your mortgage company (if any) may have language in their Deed of Trust that allows them to accelerate your note if you file for deferred property taxes. So, even if you do qualify through the state, you may not qualify through your obligation to your mortgage company and once again, you may want to consider other options, including a property tax loan.