As a Realtor, Real estate Broker, and Real Estate Investor with over 23 years experience, I have come across many unique and challenging situations when it comes to real estate practice. However, how to sell a house behind on taxes isn’t one of them!
See Related: What It REALLY Costs To Sell A Home In Tucson!
Selling a house in Tucson which is behind on taxes isn’t easy.. but it can be done! In today’s post, I would like to cover some of the most common questions people have about how to sell a house behind on taxes!
When You Sell A House Who Pays The Property Tax?
The first thing to understand about selling a house that is behind on the property tax is understanding who is responsible for the tax! Obviously, the homeowner is responsible for paying the tax itself, and it can be paid either through the mortgage (if you have one) or persosnally if you don’t.
Most people’s problems begin with a home that is either paid off, or they have a situation where the homeowner is paying the taxes separately. Something happens, and then the tax doesn’t get paid.
I’ve seen it happen where a homeowner has a completely paid off house, and let her kids stay there on the condition they pay the tax and keep the house up. They failed to pay the taxes, and as a result, a tax lien was placed on the home! A simple case of forgetfulness can quickly add up to thousands of dollars in fees and expense!
Prior to the close of escrow, the delinquent property tax must be paid, by someone! Who is a matter of negotiation! If you have a home that you want to sell, but it has delinquent taxes on it, then you have something to negotiate with!
Who Pays Delinquent Property Taxes At Closing?
On the closing documents that you receive from the Escrow company, the delinquent property taxes will show that they are paid from your proceeds. This is where negotiation for the sale of your home becomes a critical issue.
For homeowners who have a property to sell in Tucson, but they have delinquent property taxes, an offer is generally negotiated with sufficient money to pay the outstanding tax liens and any penalties associated with it.
It is important to remember however, that when a property has delinquent property taxes, the penalties and fees can rack up quickly! Eating up any profit that the homeowner might have in equity. It is important to act quickly to stop the rapid loss of money!
What Happens If Your Property Is Sold For Back Taxes?
In Arizona, if you fail to pay your property taxes, the home’s delinquent tax is sold as a lien with the Pima County Assessor every February. Investors can (and do) buy delinquent tax liens on properties here in the County every year.
By state law, an investor owning a tax lien can charge up to 16% interest on the balance; and after four years may begin foreclosure proceedings on the note.
It is at this point that it is almost impossible for a homeowner in Tucosn to retrieve their property. The fees, interest, and time accrued make it difficult for most homeowners to pay off the debt.
When You Sell A House Do You Have To Pay Taxes?
In short, yes. Depending on the type of property it is, how you held title, and how long you held title all affect the taxes you will pay on your property when you sell it.
For most people who own a home, and then sell it as a personal residence, they fall under the Capital Gains Exemption for taxes. Again, check with your accountant for the latest rules and changes but as of this time, married couples have a $500,000 capital gains exception, and individuals have a $250,000 capital gains exception on personal residences that they have lived in 3 of the past 5 years.
For investment properties like rentals, the taxes can be steep! This is why I recommend a 1031 Exchange as it is a great way to sidestep your tax obligations for now to use your money in a more efficient way.
Get A Fast, No Obligation Offer!
It’s painful, but sometimes the best thing to do is to just get out from underneath a tax burden and a problem property. It isn’t always easy, especially if you have fond memories.
However, don’t let the nightmare of an unpaid tax burden become a nightmare! Sell a house behind on taxes quickly and efficiently by calling me today at Karl Buys Houses!
Call me or text me today at (520) 403-6227 or use the form below to get a fast, fair, offer on your unwanted Tucson home!