Whether the housing market cools – as some real estate analysts have speculated – or not, millions of homeowners have already been burned by the property tax spikes that have accompanied the soaring value of their homes. What if you can no longer pay your property taxes?
Nationally, the property tax bill for a single-family home increased 4.4% in 2020, according to Attom Data Solutions. And realAppeal, which helps people appeal property tax bills, property tax forecasts will increase by about 6.5%, on average, in 2021.
According to Michael Billnitzer, executive director of the ESOP subsidiary of the Cleveland-based Benjamin Rose Institute on Aging, these tax hikes are hitting financially vulnerable homeowners the hardest, including elderly Americans living on fixed incomes. ESOP (Empowering and Strengthening Ohio’s People) provides housing and financial advice to aging adults.
The noose of property tax for some seniors
Although monthly Social Security payments are expected to increase 5.9% in January – the biggest jump in four decades – that is not enough to help the elderly on budget meet growing demands for property taxes.
“Here in Cuyahoga County, property taxes have increased an average of 16%,” Billnitzer said. “Seniors, many of whom are already struggling to make ends meet, now face these kinds of big tax increases and find it much harder to afford to age in their homes. “
Billnitzer fears inflated property tax bills could send millions of elderly homeowners into foreclosure or into the hands of unscrupulous con artists and predatory lenders.
Antoinette Smith, ESOP Board Director, shares some tips on how to avoid these unsavory results:
Do: get (the right) help
The first step, said Smith, is to contact a United States Licensed Housing and Urban Development (HUD) Consulting Agency where you or your loved one live. HUD provides a map of approved agencies on its housing counseling page or you can call the agency’s interactive voice system at 800-569-4287 to locate an office nearby.
“HUD-approved agencies are required to have counselors individually certified by HUD,” Smith said. She advised avoiding mortgage advisors not approved by the HUD because they “will not have the same level of accreditation” and “could have questionable motives at best.”
There is often no charge to work with a HUD-approved advisor who will assess the situation and determine if the homeowner is entitled to property tax relief. Such homestead exemptions are available in many states, but vary widely. Smith said various property tax relief proposals are being considered at local and state levels across the country.
Currently in Ohio, elderly disabled and low-income residents can qualify for a $ 25,000 exemption for homestead properties. This means that if the house is worth $ 100,000, the owner would be taxed as if it was worth $ 75,000.
All homeowners in Florida, on the other hand, are eligible for a homestead exemption of up to $ 50,000, but people 65 and over who meet certain income limits can claim an additional $ 50,000.
A HUD-approved advisor will also know about any new or emerging programs aimed at reducing property taxes. And the advisor can help clients see if they’re eligible to apply for other home-related savings, like financial assistance on energy bills.
Don’ts: ignore the invoice
Opening a large property tax bill tends to elicit a “flight” reaction from low- and moderate-income seniors who don’t have the resources to pay it, according to Smith. Ignoring the problem, however, will make it worse.
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When homeowners don’t pay their property taxes, the local tax authority will start charging interest, late fees, or both on the unpaid amount, which will further increase the bill. The local government could also put a lien on the house and possibly force a sale.
“Of course, we don’t want it to go that far,” Smith explained. “Before the bill expires, we want the elderly or their caregivers to contact a HUD housing counseling agency and contact a counselor who can help them understand what this bill means and what steps you need to take.” then take. “
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Do: Adopt a payment plan
Smith said people on fixed incomes often struggle to pay large quarterly or semi-annual lump-sum bills. But many tax agencies offer programs in which homeowners, especially those in financial difficulty, can qualify for an installment arrangement and pay their property taxes over time.
Cuyahoga County, Ohio, for example, has an “EasyPay” plan in which upcoming payments are automatically deducted each month from a checking or savings account. Paying $ 291 a month, argues Smith, is “much easier to digest” than paying half ($ 1,750) or even a quarter ($ 875) of a $ 3,500 tax bill all at once .
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Don’ts: get tricked by predatory lenders
The predatory loan is one of the biggest dangers for the elderly who find themselves in a difficult financial situation. Smith said she was alarmed by recent data suggesting that payday loan use by Americans aged 62 and over has tripled in the past five years, with annual percentage rates reaching 372%.
“We’ve had situations where seniors have two, three, or even four payday loans at a time to try to pay their taxes and it has eaten away at all their income,” Smith said. “Then they are not able to meet any of their other basic needs because they are in this vicious cycle of payday loans. “
Reverse mortgages can also be tricky.
They are among the most expensive mortgage products, and because interest is added to the loan each month – and homeowners don’t make payments – reverse mortgage balances increase over time. If a borrower dies, sells their home or moves, the loan becomes due immediately.
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Smith recommends speaking with a housing advisor before taking out a reverse mortgage and avoiding payday loans altogether.
Do: watch out for scams
Scammers don’t want to miss this golden opportunity to take advantage of tax-troubled senior homeowners and might promise easy money or higher Social Security payments.
Repel the threat by honing your fraud avoidance skills and making sure your loved one knows how to stay out of the sights of a scammer, including:
Never give out financial or personal information to someone you don’t know or trust.
Don’t click on links in emails from sources you don’t know.
Refrain from making immediate financial decisions.
“The key is to be proactive. Don’t wait for someone to come up with a solution, ”Billnitzer said. “You can eliminate scam and fraud when you take the initiative to contact an HUD-approved counselor and come up with a plan. “
Judy Stringer is a freelance writer and writer with over 25 years of media experience. Many of her frequent articles appear in Crain’s Cleveland Business, where she also writes for the newspaper’s personalized content division, Crain Content Studio. In addition to business, she covers community news and oversees special sections on senior living, wellness and home improvement for ScripType Publishing, a collection of nine monthly magazines in the counties of Summit and Cuyahoga in Ohio.
This article is reproduced with permission from NextAvenue.org, © 2022 Twin Cities Public Television, Inc. All rights reserved.
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