Texas has no state income tax, so local property taxes carry a lot of weight. In the Houston area, a home often has several taxing units on one bill: county, school district, city, community college, and in many subdivisions a MUD. When that bill goes unpaid, the costs grow quickly.
This is general information. Rules and fees vary by taxing unit, so check your bill or call your county tax office for your exact amounts.
The deadline: January 31
Property tax bills go out in the fall, and they're due by January 31 of the following year. Starting February 1, unpaid taxes become delinquent and start collecting penalties and interest.
How penalties and interest add up
- Penalty: 6% on February 1, then 1% more each month, reaching 12% by July 1.
- Interest: 1% per month, and it keeps running until the balance is paid.
- Collection fee: Taxes still unpaid on July 1 can be turned over to a collection attorney, and many taxing units add a collection fee of up to 20%.
Put together, a tax bill that's still unpaid on July 1 can end up around 40% higher than the original amount once the penalty, interest and a 20% collection fee are added, and interest keeps building every month after that.
When a tax suit can happen
After taxes are delinquent, the taxing unit can file a lawsuit to collect. If the court rules for the taxing unit, the property can be sold at a tax sale, which usually happens on the first Tuesday of the month, like mortgage foreclosures.
Texas does give owners a right of redemption after a tax sale. For a homestead, it's generally two years. For most other properties, it's 180 days. Redeeming isn't cheap, though. You have to repay what the buyer paid plus a premium set by law. It's much better not to get that far.
Options to get ahead of it
- Installment agreement. Many tax offices offer payment plans for delinquent taxes, especially on a homestead. Ask your county tax office what's available.
- Deferral for seniors and disabled homeowners. Homeowners 65 or older, or disabled, can often file a tax deferral affidavit on their homestead. It can stop a tax sale while they live there, though interest still builds at a reduced rate.
- Check your exemptions. Make sure you have your homestead exemption, and the over-65 or disabled exemption if you qualify. They can meaningfully lower future bills.
- Protest your value. If the appraisal district's value is too high, protesting by the deadline each spring can lower next year's bill.
- Sell the property. If the taxes have grown beyond what you can realistically pay, selling pays them off at closing out of the sale proceeds and stops the penalties immediately.
What happens to back taxes when you sell
In any sale, the title company gets a tax certificate showing what's owed. Delinquent taxes, penalties and interest are paid directly from the proceeds at closing, so the buyer gets clear title and you don't have to come up with the money first. If the house also needs repairs, has tenants, or is inherited, a cash sale lets you handle it all at once.
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