FAQs about Property Tax Loans

Frequently asked questions

Property tax loans are loans issued by private lenders to help property owners pay the property tax that counties assess on their property based on the property’s market value on January 1 of the taxing year.

When a property owner lacks the lump sum of cash necessary to pay his or her property tax, the property owner can take out a loan in the amount of the tax. That cash is then paid to the government to satisfy the property owner’s tax obligation.

The property owner then enters into a customized repayment plan with the lender to repay the loan over time according to a personalized schedule that works with for the property owner’s unique financial situation.

Property tax is generally due upon receipt of the tax bill. Local taxing authorities-typically counties-generally mail property tax bills in November of a given tax year. The property owner then usually has until January 31 of the following year pay the tax in full.

After that point in time, taxing authorities are authorized to charge late fees, interest, and attorneys’ fees. These fees can add up quite quickly, and they can dramatically increase the total cost of a property owner’s property tax bill.

Beginning on February 1 of the year following the tax year (i.e. about 2 months after property tax first becomes due), local taxing authorities are authorized to charge a late fee equal to 6% of the total property tax bill. Taxing authorities are also authorized to charge interest at the rate of 1% per month for the first month and tack on an additional 1% for each month the property tax remains unpaid.

And beginning on July 1 of the year following the tax year (i.e. about 7 months after property taxes first become due), taxing authorities are authorized to double the base late fee to 12%. Furthermore, taxing authorities may also charge up to a 20% attorney’s fee to cover costs associated with any subsequent litigation necessary to recover the unpaid property tax.

All these fees and penalties ultimately mean property owners could be liable for an extra 38% or more of their property tax bill if they let the bill become too long overdue.

Property tax loans are available to help pay the property tax levied on nearly all residential real property-that is, property that you live on, whether as a primary or secondary residence. Property tax loans are also available to help pay the property tax on both real and personal commercial property.

Texas is one of just a few states in the country that charges property tax on all of a business’s tangible personal property. This includes things like equipment, machinery, office furniture, and supplies. It also includes all of a business’s inventory.

Thus, property tax loans are especially helpful to businesses because they allow the business to satisfy its tax burden over time instead of in a lump sum each fall, freeing up valuable cashflow to reinvest and grow the business.

Property tax loans are secured by a lien on the subject property. A lien is an interest in a piece of property held by a third party creditor that gives the creditor certain rights with respect to the property.

When a property owner fails to pay his or her property taxes on time, the government places a lien on the subject property. Likewise, property tax loans are secured by liens on the subject property.

Liens allow creditors to foreclose on a piece of property and sell it in order to recover the debt if need be. But we should point out that foreclosures are relatively rare in the industry overall, and here at PropertyTaxLoanPros.com, we strive to avoid foreclosure in all but the most dire circumstances.

No! Property tax loans help property owners pay a debt that they already owe to the government. For this reason, it would be inaccurate to characterize a property tax loan as “new” debt because the debt is already due and owing to the government.

Rather, the property tax lender will satisfy the tax obligation for the property owner, and the government will then transfer its tax lien to the lender. The property owner is then in debt to the property tax lender instead of the government.

Nearly all Texas property owners are eligible for property tax loans. With certain exceptions for property owners over the age of 65, disabled property owners, and veterans, property owners need only to be at least 18 years of age, have proof of ownership of the subject property, and owe at least $3,500 in property tax.

When a property owner can take out a property tax loan depends primarily on whether the property is already subject to another third-party interest, such as a mortgage. If a residential property is not subject to a mortgage (i.e. the owner owns it outright), then that owner may take out a property tax loan once the tax becomes due.

By contrast, if the residential property is subject to a mortgage, property taxes generally must be overdue before the owner can take out a property tax loan.

No problem! Having less-than-perfect credit will not disqualify you from receiving a property tax loan from PropertyTaxLoanPros.com.

We recognize that everyone experiences difficulties and hardships from time to time and that many times they occur because of factors totally outside your control. For this reason, we evaluate every potential client from a holistic perspective instead of viewing them simply as a number on a credit report.

No. Applying and receiving approval for your property tax loan will cost you nothing upfront. Our online application process is simple and straightforward. Simply start your application online and one of our lending professionals will follow up with a phone call to gather the rest of the information we need to determine your eligibility and the terms of your loan.

Given the time-sensitive nature of property taxes in general, we seek to streamline our application and approval process as much as possible.

Potential clients can usually complete the application in a matter of minutes. Approval usually takes about a week, with funds dispersing to satisfy the tax obligation shortly afterward. But this process can be expedited in emergency situations, especially when it would help our clients avoid ballooning late fees and penalties.

Every client’s interest rate will differ based on factors such as the client’s unique financial circumstances, the subject property’s location, and its value.

In any event, however, the interest rates that our clients pay will almost always be less than the late fees and penalties charged by taxing authorities, especially the longer the tax remains unpaid.

Property tax lenders are authorized to charge several other fees in connection with the loans they issue. These fees, however, are not intended to help lenders profit. Instead, they are designed to make it easier for lenders to continue to serve their communities by providing an additional source of revenue for lenders to use to mitigate their overhead operating expenses.

These charges include fees necessary to cover the cost of title searches, insurance, and recording expenses among others.

A full list of additional authorized fees is set forth in the Texas Finance Code.

Perhaps the most beneficial feature of property tax loans are that they allow property owners to pay their taxes over time according to a schedule that works for them and their unique financial situation.

Because the terms of every property tax loan are customized to the needs of each individual client, the total loan term will vary from client to client.

However, it is common for loan terms to range anywhere from two to ten years, depending on the client’s needs.

If the loan is issued to pay property taxes on a residential property that is “owned and used by the property owner for personal, family, or household purposes,” then yes. In those cases, lenders are not authorized to charge a prepayment penalty, allowing property owners to pay off their loan as soon as they can regardless of the loan’s terms.

Yes. The property tax lending industry is regulated at the state level by the Texas Office of Consumer Credit Commissioner, also known as the OCCC.

You can reach the OCCC by phone at (512) 936-7600, on the web at https://occc.texas.gov, or in person at 2601 N. Lamar Blvd., Austin, TX 78705.

Property tax loans save property owners money primarily by helping them avoid the substantial late fees and penalties charged by taxing authorities when property taxes become overdue.

Instead of paying an interest rate that increases each month and late fees and penalties that increase as much as 533% at the 6-month mark, property tax loans allow property owners to satisfy their tax obligation on their own terms and with a low interest rate that is fixed for the life of the loan.

For more information about property tax loans, be sure to check out our blog for the latest trends and developments in the property tax lending industry.

You can also visit the Texas Property Tax Lienholders Association on the web at https://tptla.org to learn all about how property tax loans have helped thousands of businesses and individuals in Texas satisfy their tax obligations and take control of their finances at the same time.