What Happens to Delinquent Property Taxes When the Owner Dies?

Property taxes are one of the many costs of homeownership. Although they’re assessed on an annual basis, typically your mortgage company takes care of paying them. If there are overdue property taxes when someone dies, the money to pay those taxes will come out of the estate, along with money to pay all other debts. If necessary, the house and other assets will be sold to pay the debts.

If you’re facing unpaid property taxes on a deceased person, it means that person missed one or more payments. Typically, property taxes are paid through the mortgage company. If your loved one paid the house off in full, though, the bill would start coming directly to him. Failure to pay could have simply been an oversight, but it’s possible late property taxes are deliberate.

The tax collector will give the homeowner sufficient notice that payment is overdue. However, when those notices are ignored, eventually the county can place a lien on the property, which means before the home can be sold the county will get the money owed. If they are neglected for too long, the county can place the property up for sale to collect its money. Whatever the cause, overdue property taxes after the death of a parent or other loved one can easily become your problem.

When a homeowner dies while owing property taxes, what happens next depends on the property’s heirs. If there are no heirs, the state would take over the estate of the person who died. The home would be sold and any unpaid property taxes on the deceased person would be taken out of the proceeds of that sale.

Like other debts, property taxes when someone dies are wrapped into the estate. That means whoever inherits the estate inherits all the debt that comes with it. Whether or not the overdue taxes have resulted in a lien, the easiest course of action may be to approach the local taxing authority with an offer to pay off the overdue taxes. This could make things easier for everyone, clearing the way for you to distribute the remaining assets.

Don’t assume that the property tax assessment is correct. Homeowners have the right to object to an assessment if it seems to be in error. At the very least, you may be able to negotiate a lower tax debt that will leave more money in the estate. It might be worth the extra expense to have a professional property appraiser put a value on the property, which you can then use as documentation that the assessment of the value was incorrect.

If you’re dealing with property taxes after the death of a parent, it will likely be handled during the probate process. However, if not, it will pass to the survivors. In many cases, the survivors opt to sell the home and pay any overdue taxes with the proceeds. If you aren’t the one inheriting the estate, the unpaid property taxes on a deceased person will become the responsibility of the heirs.

The money to pay property taxes after the death of a parent or other loved one will come out of the estate. If, however, there is not enough money to pay off all the debt your loved one had, they won’t come after survivors to personally handle the debt. The procedure is for the executor to file with the courts to have the estate declared insolvent. Any assets in the estate will be liquidated and the money distributed to creditors in order of priority. But any remaining creditors after that won’t get any money.