Here's What Happens if You Stop Paying Your Property Taxes

The consequences could be pretty terrible.

When you buy a home, it's not just your mortgage loan you have to worry about paying. You also have to keep up with additional expenses like homeowners insurance, maintenance, repairs, and property taxes.

The latter expense can be a huge burden, though -- especially because it has the potential to rise over time. And in some parts of the country, property taxes can be prohibitively expensive.

In Alabama, the median property tax bill is $742, according to Motley Fool research. By contrast, in New Jersey, the median property tax bill is a whopping $8,928.

If your property tax bill has risen since you purchased your home, you may be struggling to keep up with it. Or, if your financial situation has worsened, you might be in the same boat.

Unfortunately, just as not paying your mortgage could result in you losing your home, so too could not paying your property taxes lead to a similar outcome. So it's important to do what you can to keep up with those payments -- or try to lower them.

When you stop paying your property taxes

Nolo reports that when you don't pay your property taxes, the amount you owe can result in a lien being placed on your property. That lien then effectively makes your home serve as collateral for that unpaid debt.

Meanwhile, Nolo says that all states have laws that allow local governments to sell a home through a tax sale process to collect overdue taxes. So all told, if your property tax bill goes unpaid for long enough, you'll risk losing your home.

How to scrounge up money to pay your property taxes

If you've fallen on hard times or are struggling to keep up with rising property taxes, and you don't expect your situation to change for the better, then you may want to consider selling your home and moving to one whose property taxes are less of a burden. But if that's not desirable, and you think you'll be in a better place to cover your property taxes in time, then you may want to try borrowing money to cover a near-term bill.

One option may be to tap home equity you're sitting on. A home equity loan can be a reasonably affordable way to borrow money, and the same applies to a personal loan (which isn't based on home equity).

To be clear, though, borrowing money every quarter (or whenever your property taxes are due) to pay your property taxes isn't a viable solution in the long run. It's one thing to take out a loan to get through a rough financial patch, but you shouldn't set yourself up to keep borrowing to cover those bills.

You may want to look at an appeal

If you're struggling to afford your property taxes because they've risen a lot, it may be worth looking into appealing your property taxes. Doing so could get your bill lowered.

That said, to be successful in this regard, you'll need to prove that the assessed value of your home is higher than what it should be. If you can't find data pointing to comparable homes in your area having sold for less money than your recent assessment, then you may not be able to get your property taxes lowered.

The process for appealing property taxes can also be burdensome in some areas. You might have to pay a substantial fee and attend a hearing in court, which could cause you to miss work and lose income. So before you rush to appeal your property tax bill in the hopes of lowering it, you'll want to make sure you have a solid argument.