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The Consequences of Not Paying Your Property Taxes

Posted by Nina Whitehurst | Jul 26, 2023 | 0 Comments

When Geraldine Tyler, age 94, relocated to a senior community, she stopped paying property taxes on her home.

After the property was foreclosed on, the county where Tyler's home was located sold the property for $40,000 to recover about $15,000 in unpaid property taxes. Tyler received none of the remaining profits from the sale.

Tyler took her case to the U.S. Supreme Court, arguing that Tyler's local government violated the U.S. Constitution by keeping more money than it was owed and not returning surplus funds to her.

One of the key issues in this case was whether Minnesota's Hennepin County violated the Fifth Amendment, which prohibits taking private property for public use without just compensation.

Tyler owed $2,300 in property taxes and approximately $12,700 in interest, penalties, and costs. Hennepin County foreclosed on her home and sold it for $40,000. After repaying itself, it kept the $25,000 remaining and left Ms. Tyler with nothing. Tyler contended this was a violation of the U.S. Constitution. In late May 2023, the U.S. Supreme Court ruled in favor of Geraldine Tyler. 

Why This Case Is Important for Seniors

The Tyler case highlights an all-too-common issue many elderly homeowners experience after transitioning from their home to a nursing home, a senior community, or assisted living facility.

Many seniors do not sell their home because they wish to leave it to their heirs. However, this transition can often lead to seniors losing track of their finances and failing to pay certain obligations such as their property taxes.

The consequences of doing so can be severe. One is the loss of your home. Another is the loss of the opportunity to transfer wealth from one generation to the next and minimize capital gains taxes paid by heirs. For many people, their home is their most valuable asset.

For seniors receiving certain needs-based benefits, conversion of the home to a little cash in the bank could result in loss of those government benefits until the money runs out, on top of the expense and hassle of having to move.

As people age and depend on a fixed income, many fall behind on their taxes. While this may be a stressful issue, it should not be ignored as it can lead to them losing all the equity they have in their homes.

If you or a loved one may be facing this situation, talk about it before it gets out of hand or unmanageable.

What You Should Do

What can you do if you or a loved one have questions about your property tax obligations as the transition to a different stage of life happens?

First, understand that as long as a person is a homeowner, he or she must pay property taxes. However, in many states, once a homeowner reaches a certain age or their income decreases, he or she may be entitled to a property tax exemption or discount. The homeowner should apply for this as soon as possible upon becoming eligible, as in some states, it can reduce the obligation amount significantly.

If your loved one is in a nursing home or elder care facility, speak with him or her about the issue and see if he or she is up to date. Check in with the local tax assessor and verify where things stand.  In many states this is public information.  In others you might need a power of attorney.

Finally, if you are behind on property taxes, be proactive about resolving the delinquency. Many local governments have programs to help homeowners repay their debt and keep their property.

In the Tyler case, Tyler, by law, had the right to redeem her property and repay her unpaid taxes, interest, penalties, and fees over three years. Other states have similar programs. However, these generally must be entered into within a specific timeframe. This is why addressing the issue as soon as possible is crucial.

Helping Senior Homeowners

The bottom line is that a homeowner, regardless of his or her age, needs to pay property taxes to preserve the ability to transfer generational wealth to in the form of home equity.

Children, trusted friends, or caretakers may need to be proactive in helping senior homeowners assess whether they may have a delinquency to avoid the severe consequences of not paying property taxes imposed by some states.

Consult with your elder law or attorney for further guidance. 

About the Author

Nina Whitehurst

Attorney at Law Nina has been practicing law for over 30 years in the areas of estate planning, real estate and business law She is currently licensed in Alaska, Arizona, California, Colorado, Oregon and Tennessee. Her Martindale-Hubbell attorney rating is the highest achievable: 5 stars in peer...


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