Property taxes keep rising: what retirees should – and shouldn’t – do when they can’t pay them

Whether or not the hot housing market cools – as some real estate analysts have speculated – millions of homeowners have already been burned by the spikes in property taxes that came with their skyrocketing home values. What to do if you can no longer afford your property tax

According to Attom Data Solutions, property tax on a single family home rose 4.4% nationwide in 2020. And realAppeal, which is helping people appeal against property tax laws, predicts property taxes will rise an average of 6.5% in 2021.

These tax increases hit financially weak homeowners hardest, including older Americans living on steady incomes, according to Michael Billnitzer, executive director of the Cleveland-based Benjamin Rose Institute of Aging’s ESOP subsidiary. ESOP (Empowering and Strengthening Ohio’s People) provides housing and financial advice to aging adults.

The basic control vise for some older adults

While monthly social security payments are set to rise 5.9% in January – the biggest jump in four decades – that’s not enough to help budget-struggled older adults meet soaring property tax demands.

“Here in Cuyahoga County, property taxes have increased an average of 16%,” said Billnitzer. “Older adults, many of whom have already struggled to make ends meet, are now facing such drastic tax increases and have a much harder time affording aging in their homes.”

Billnitzer fears that bloated property tax bills could put millions of elderly homeowners into foreclosure or into the hands of unscrupulous fraudsters and predatory lenders.

Antoinette Smith, ESOP’s Advisory Director, shares some tips on how to avoid these unpleasant results:

Do: Get (the right) help

The first step, Smith said, is to contact a US-approved housing and urban development consultancy (HUD) where you or your loved one lives. HUD has a map of approved agencies on their housing advice page, or you can call the agency’s interactive voice system at 800-569-4287 to find an office nearby.

“HUD-approved agencies must have individual HUD-certified consultants,” said Smith. She advised staying away from mortgage advisors who are not HUD approved because they “don’t have the same level of references” and “may have dubious motives at best”.

It’s often free to work with a HUD-approved advisor to assess the situation and determine if the homeowner is eligible for the property tax reduction. Such homestead exemptions are available in many states, but they vary widely. Smith said various proposals to ease property tax at the local and state levels are being considered across the country.

Currently, disabled elderly low-income Ohio residents can qualify for $ 25,000 homestead leave. That is, if the home was worth $ 100,000, the owner would be taxed as if it were worth $ 75,000.

In contrast, all Florida homeowners are eligible for up to $ 50,000 exemption, but those 65 and older who meet certain income limits can claim an additional $ 50,000.

A HUD-approved advisor will also be aware of any new or emerging wealth tax relief programs. And the advisor can help clients figure out if they qualify for other household savings, such as financial assistance with energy bills.

Don’t: ignore the bill

Smith said the opening of a major property tax bill tends to create an “escape” reaction among low- and middle-income older people who lack the means to pay for it. However, if you ignore the problem, it will get worse.

Related: Social security recipients get a big raise – but also keep falling behind

If homeowners fail to pay their property taxes, the local tax authority will begin charging interest, late payment interest, or both on the unpaid amount, adding to the bill. The local government could also mortgage the house and eventually force a sale.

“Of course we don’t want it to come to that,” explained Smith. “Before the bill is due, we would like older adults or their caregivers to contact a HUD housing advice agency and get in touch with a counselor who can help them understand what that bill means and what action to take next . “

See also: The latest problem for the elderly: rising food prices

Do: Get a payment plan

Smith said that people on fixed incomes often have difficulty paying large, flat-rate quarterly or half-yearly bills. However, many tax authorities offer programs that allow homeowners, especially those in financial distress, to qualify for an installment payment and pay off their property taxes over time.

Cuyahoga County, Ohio, for example, has an “EasyPay” plan that automatically debits pending payments from a checking or savings account each month. Paying $ 291 a month, Smith said, is “a lot 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’t: Let predatory lenders capture you

Robbery loans are one of the greatest dangers for the elderly in financial distress. Smith said she was alarmed by recent data suggesting that payday loan use by Americans age 62 and older has tripled in the past five years, with percentages up to 372% annually.

“We have had some situations where seniors have two, three, or even four payday loans at once to pay their taxes and that eats up all of their income,” said Smith. “They are then unable to meet their other basic needs because they are caught in this vicious circle of payday loans.”

Reverse mortgages can also be fraught with pitfalls.

They are some of the most expensive mortgage loan products, and since the loan is topped up with interest every month – and the homeowners make no payments – the reverse mortgage balance grows over time. If a borrower dies, sells his apartment or moves out, the loan is due immediately.

See also: My wife and I saved $ 775,000 for retirement and will be paying off our mortgage in six years. Would it be a mistake to move to California?

Smith recommends speaking with a real estate advisor before taking out a reverse mortgage loan and avoiding payday loans altogether.

Do: Be vigilant about scams

Scammers do not want to miss this unique opportunity to take advantage of tax-disadvantaged older homeowners and promise easy money or higher social security payments.

Fend off the threat by brushing up on your fraud prevention skills and making sure your loved ones know how to stay out of the crosshairs of a fraudster, including:

  • Never give financial or personal information to anyone you do not know and whom you do not trust.

  • Do not click links in emails from unknown sources.

  • Avoid making immediate financial decisions.

“The key is to be proactive. Don’t wait for someone to come to you with a solution, ”said Billnitzer. “You can eliminate fraud and cheating if you take the initiative to contact a HUD-approved advisor and develop a plan.”

Judy Stringer is a freelance writer and editor with over 25 years of media work experience. Much of her frequent articles appear in Crain’s Cleveland Business, where she also writes for the newspaper’s custom content division, Crain Content Studio. In addition to business, she reports for ScripType Publishing, a collection of nine monthly magazines in the Summit and Cuyahoga counties of Ohio, and oversees senior housing, wellness, and home improvement departments.

This article is used with permission from. reprinted, © 2022 Twin Cities Public Television, Inc. All rights reserved.

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