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Texas big city / county annual real estate tax deferral

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  • SA_Steve

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    Oct 1, 2014
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    San Antonio, Texas USA
    Anyone taking advantage of this deal ? What's the downside (how are annual interest rates calculated for the eventual pay off of the lien)?
    Why don't they publish this deal's details rather than say to call them ?
    I called a couple times today but was told to call back next week.
     

    candcallen

    Crotchety, Snarky, Truthful. You'll get over it.
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    Jul 23, 2011
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    Little Elm
    Certain groups can defer property tax till they die and the property is sold or they sell the property. It accrues, it's just deferred.

    Disabled and old folks I think. Maybe others. Veterans?

    That shit adds up quick. 7 grand a year in taxes can eat ip alot of equity quick. Add interest and....

    Also I don't know who pays if the property equity can't cover the taxes upon sale.

    Interest rate is 5 percent I think.

    Simple interest not compounded. 5 percent of the total at time of sale.
     

    SA_Steve

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    Oct 1, 2014
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    San Antonio, Texas USA
    "You may be aware that seniors can apply for an exemption from Texas property taxes. This is true: when you reach the age of 65, you can file an affidavit with the chief appraiser in your district to exempt yourself from the collection of taxes on your property."
     

    GeorgeS

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    Jul 7, 2018
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    San Antonio
    "You may be aware that seniors can apply for an exemption from Texas property taxes. This is true: when you reach the age of 65, you can file an affidavit with the chief appraiser in your district to exempt yourself from the collection of taxes on your property."
    Really?
     

    Wiliamr

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    Apr 15, 2011
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    The taxes are not waived. They don’t go away. The tax deferral simply delays when the tax has to be paid. Instead of paying your property tax bill in January of each year, the taxes will be collected when the home is sold or transferred. Interest at 5% annually continues to accrue but the taxing authority won’t pursue collection activities.

    Deferral ends when person who qualified the property for the deferral no longer owns the property as their residence homestead. This generally happens in one of two ways: 1) the home is sold, or 2) the home is inherited after the death of the last surviving qualified person. The deferral also terminates if the qualified person no longer occupies the property as their primary residence. Important note, key word is "occupies".


    When the deferral is terminated, the deferred taxes and accrued interest must be paid in full. There will be a tax lien on the property that will have to be paid when the home is sold in order for a clear title to be issued. If the home was inherited, the new owner will have until the 181st day after the date the qualified person no longer owns and occupies the property as their primary residence. After the 181st day, penalties will be assessed.
     

    ZX9RCAM

    Over the Rainbow bridge...
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    May 14, 2008
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    The Woodlands, Tx.
    "You may be aware that seniors can apply for an exemption from Texas property taxes. This is true: when you reach the age of 65, you can file an affidavit with the chief appraiser in your district to exempt yourself from the collection of taxes on your property."

    Do certain conditions apply, or is it just automatically so?
     

    OutlawStar

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    Sep 14, 2017
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    Anna
    Sounds like a horrible idea unless you're left with no other options so late in life. Might be okay to keep $7k+ a year if you don't care about essentially surrendering your house to the state once you assume room temperature. Not sure if that is better or worse than doing a reverse mortgage and surrendering your house to the bank during the final chapters of your life. Theres got to be a better way for seniors especially if they have family living anywhere else in the country.
     

    SA_Steve

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    Oct 1, 2014
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    San Antonio, Texas USA
    I've checked with the brother of a friend of mine who died 6 months ago. He had been on the plan with Harris County for his $850,000 house. Brother says they have paid off the lien in prep to sell the house but it will take up to 90 days for the county to release the lien. Gov efficiency at its finest.

    Think I'll pass on this deal, unless interest rate difference comes into play. I do expect the county will have some kind of floating rate to kill this idea.
     

    gdr_11

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    This is something that I picked up on years ago and I am strongly considering it for next year. With a modest property and a low or no mortgage balance, a $3500 annual deferral is not a big deal especially when I plan on doing no more than another 3-4 years here because physically I can barely keep up now, much less as I push 80 year old.

    To me, having my heirs lose out on $15K-$20K from the sale of the home is no big deal and now that I am on a reduced income post-Covid, I can use that money for other things.

    My only concern is that, even though the counties will not pursue collection (by law), it is not clear if they can still report you as delinquent to the credit agencies even though this is a state constitutional right. Don't forget that credit ratings are used for things like insurance rates, etc. even though they have nothing to do with your car and home insurance. Just ask your agent what a 600 credit score will do to your premiums.
     
    Last edited:

    OutlawStar

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    Sep 14, 2017
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    Anna
    This is something that I picked up on years ago and I am strongly considering it for next year. With a modest property and a low or no mortgage balance, a $3500 annual deferral is not a big deal especially when I plan on doing no more than another 3-4 years hear because physically I can barely keep up now, much less as I push 80 year old.

    To me, having my heirs lose out on $15K-$20K from the sale of the home is no big deal and now that I am on a reduced income post-Covid, I can use that money for other things.

    My only concern is that, even though the counties will not pursue collection (by law), it is not clear if they can still report you as delinquent to the credit agencies even though this is a state constitutional right. Don't forget that credit ratings are used for things like insurance rates, etc. even though they have nothing to do with your car and home insurance. Just ask your agent what a 600 credit score will do to your premiums.
    I'm far from a financial planner and only going off information I've heard from the internet (so it must be true, right?) But can't you put the house into a living trust and give it to a trusted heir to avoid the death taxes and simply "pay rent" to that heir making them responsible to pay the property taxes? Kindof in a roundabout way saying "here you're getting the house but I need help paying bills while I'm living" sorta arrangement?

    It would be interesting hearing from an actual financial planner (not me) the best way to avoid paying more taxes especially when your heirs are grieving and now they're given a surprise tax bill of $15-20k (or more depending how long you live in the house). I assume if an heir takes ownership of the house and simply cannot pay $20k in back taxes to legally take ownership of the house, does the state just auction it for whatever they can get, their their cuts and pass the rest to your successors making them lose out on even more?
     

    TheDan

    deplorable malcontent scofflaw
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    8   0   0
    Nov 11, 2008
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    Austin - Rockdale

    The taxes are not waived. They don’t go away. The tax deferral simply delays when the tax has to be paid. Instead of paying your property tax bill in January of each year, the taxes will be collected when the home is sold or transferred. Interest at 5% annually continues to accrue but the taxing authority won’t pursue collection activities.

    Deferral ends when person who qualified the property for the deferral no longer owns the property as their residence homestead. This generally happens in one of two ways: 1) the home is sold, or 2) the home is inherited after the death of the last surviving qualified person. The deferral also terminates if the qualified person no longer occupies the property as their primary residence. Important note, key word is "occupies".


    When the deferral is terminated, the deferred taxes and accrued interest must be paid in full. There will be a tax lien on the property that will have to be paid when the home is sold in order for a clear title to be issued. If the home was inherited, the new owner will have until the 181st day after the date the qualified person no longer owns and occupies the property as their primary residence. After the 181st day, penalties will be assessed.
    Sounds like a great deal for the childless. Personally I intend to leave a working small farm to my grandkids.

    I'm assuming a trust or corporation can't get this deferral?
     

    gdr_11

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    Aug 1, 2014
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    I'm far from a financial planner and only going off information I've heard from the internet (so it must be true, right?) But can't you put the house into a living trust and give it to a trusted heir to avoid the death taxes and simply "pay rent" to that heir making them responsible to pay the property taxes? Kindof in a roundabout way saying "here you're getting the house but I need help paying bills while I'm living" sorta arrangement?

    It would be interesting hearing from an actual financial planner (not me) the best way to avoid paying more taxes especially when your heirs are grieving and now they're given a surprise tax bill of $15-20k (or more depending how long you live in the house). I assume if an heir takes ownership of the house and simply cannot pay $20k in back taxes to legally take ownership of the house, does the state just auction it for whatever they can get, their their cuts and pass the rest to your successors making them lose out on even more?
    1. We have to assume that the heirs are "grieving" (my unfortunate experience has been that the death of an older person with assets brings out the worst in some folks and the decent ones are often locked in a battle with the blood suckers. I have seen this take place 5-6 times including with the death of my own father (this is why when I handed by siblings their checks 35 years ago I never spoke to any of them again).

    2. I know from experience that when the IRS has a lein on your house for back taxes, it is paid out of escrow, not out of the pocket of seller or buyer so it seems most likely that, unless the heir wants to live in the home themselves (none of mine have any wish to live in Texas), the home would be sold and the escrow process would pay off the County.

    If really depends on the individual family circumstances.
     
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