If Tennessee homeowners don't pay property taxes, the consequences can be significant. From potential tax liens leading to property auctions to the risk of losing ownership rights, failing to meet tax obligations can have lasting impacts. Understanding the implications of non-payment is crucial for safeguarding property interests and financial well-being. Whether you’re a first-time home buyer or a long-time owner, staying informed is essential to navigating the complexities of property taxes in Tennessee. 

Important Points

• A tax lien may be placed on the property, leading to a potential auction.
• Non-payment risks loss of property ownership.
• Tax lien takes priority over other liens or mortgages.
• Timely payment is crucial to avoid consequences.
• Seek resolution through the County Trustee's office promptly.

What Happens When You Don't Pay Property Taxes?

Failing to pay property taxes in Tennessee can lead to the imposition of a tax lien on the owner’s property. When property owners have delinquent taxes, the county trustee's office may place a tax lien on the property. This home lien gives the government the authority to sell the property to recover the unpaid taxes. It's important to note that a tax lien takes priority over other liens or mortgages on the property, making it a serious consequence of non-payment.

If the taxes remain outstanding, the property may be sold at a tax sale to recoup the delinquent taxes owed. During these sales, auctioned properties are sold to the highest bidder, typically requiring cash, money order, or cashier's check as payment. Property owners facing auctioned properties have a one-year redemption period to reclaim their property by paying the purchase price plus 10% annual interest. To prevent this from happening, property owners must ensure timely payment of property taxes.

Are Property Taxes Included in a Mortgage?

For most types of mortgages, you'll pay property taxes with your mortgage payment (along with principal, interest, and homeowners insurance). Check your monthly statement, or your closing documents if you're new to homeownership. However, it's important to note that they're technically separate payments; the lender is just submitting your taxes for you. They have an interest in making sure you keep your property, since a tax lien takes precedence over a mortgage lien in the event your home is sold at auction.

Lenders who include your property taxes in your mortgage payments will typically estimate your property tax bill, divide it by 12, and have you pay that amount every month, with a bit of cushion. If their estimate is off at the end of the year, they'll either require you to pay the difference or give you a refund. The tax payments go into an escrow or impound account, which the lender uses to pay your property taxes on your behalf when they come due.

It's crucial for owners to stay on top of property taxes to avoid penalties, interest charges, and potential tax lien sales. While mortgage companies may often handle tax payments for homeowners, ultimately, it's the homeowner’s responsibility to ensure that their property taxes are paid on time. If you think your mortgage company hasn't submitted your tax payment on time, you need to contact both your lender and the local tax authority as soon as possible.

In Tennessee, there are property tax relief and tax freeze programs that can help eligible individuals reduce the amount of property taxes due, especially for those with a principal residence. However, it's important to understand that these programs don't eliminate the need to pay property taxes altogether. To prevent the risk of facing financial and legal consequences, it's essential to be proactive in managing your property tax payments separate from your mortgage.

How to Resolve Unpaid Property Taxes

Contacting the County Trustee's office is a crucial first step in addressing unpaid property taxes in Tennessee. If homeowners in Williamson County or Davidson County have missed the delinquency date for their property taxes, they should act promptly to avoid further penalties and interest accruing on the unpaid amount.

When reaching out to the County Trustee's office, homeowners should inquire about potential payment plans that could help settle their outstanding taxes gradually. Additionally, they should ask about any available tax relief programs that they may qualify for to alleviate some of the financial burden associated with unpaid property taxes.

In certain cases, participating in a tax sale could be a viable option to prevent the escalation of consequences due to non-payment. By proactively addressing your unpaid property taxes, you can mitigate the risk of facing additional fees, legal actions, or even the loss of ownership of your property. Seek guidance from professionals to resolve this effectively and protect your property from further repercussions.

Property Tax Relief Programs in Tennessee

Property owners should explore the Tennessee property tax relief programs for potential financial assistance. Owners may be eligible to receive assistance if they qualify as an elderly, disabled, or disabled veteran property owner. These programs offer relief by freezing property tax increases or providing financial aid based on specific eligibility criteria like age, disability status, and military service.

For current and prospective homeowners who don’t meet the criteria for tax relief, choosing one of Tennessee’s counties with the lowest property taxes can provide relief in the form of lower rates.

The application process for tax relief may involve a review by the State Tax Relief Office. It's worth noting that property owners aged 65 and above can benefit from the state-funded tax relief program without having to meet a specific income requirement. For the tax freeze program, the State Comptroller's Office calculates income limits for each county yearly to determine eligibility.

The Bottom Line: Stay On Top of Your Tennessee Property Taxes

Whether you’re a first-time homebuyer or retiring in Tennessee, staying up to date on your property taxes in Tennessee is vital to avoid potential consequences such as tax liens, auctions, and even the loss of property ownership. Take the necessary steps to resolve any unpaid taxes and explore property tax relief programs available to help you manage your obligations. Keep up with payments to protect ownership rights and avoid any unnecessary financial burdens.