Property taxes keep rising: What retirees should do — and not do — if they can’t afford them

Whether the boiling housing market cools – as some real estate analysts have speculated – or not, millions of homeowners have already been burned by the property tax spikes that have accompanied the skyrocketing value of their homes. . What if you can no longer pay your property taxes?

Nationally, the property tax bill for a single-family home rose 4.4% in 2020, according to Attom Data Solutions. And realAppeal, which helps people appeal their assessed property taxes, predicts that property taxes will increase by approximately 6.5%, on average, in 2021.

According to Michael Billnitzer, executive director of the ESOP affiliate of the Cleveland-based Benjamin Rose Institute on Aging, these tax increases are hitting financially vulnerable homeowners the hardest, including older Americans living on fixed incomes. ESOP, or Empowering and Strengthening Ohio’s People, provides housing and finance counseling for aging adults.

The property tax stranglehold for some seniors

Although 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-strapped seniors meet rising tax demands land.

“Here in Cuyahoga County, property taxes have gone up an average of 16 percent,” Billnitzer said. “Older people, many of whom are already struggling to make ends meet, are now facing these kinds of steep tax increases and finding it much harder to afford to age in place.”

Billnitzer fears inflated property tax bills could send millions of elderly homeowners into foreclosure or into the hands of unscrupulous crooks and predatory lenders.

Antoinette Smith, ESOP Consulting Director, offers the following advice on how to avoid unfortunate results.

Do: get help (the right one)

The first step, Smith said, is to contact a US Accredited Housing and Urban Development Consulting Agency where you or your loved one live. HUD provides a map of approved agencies on its housing counseling page, or you can call the agency’s interactive voice system at (800) 569-4287 to locate an office nearby.

“HUD-approved agencies are required to have counselors individually certified by HUD,” Smith said. She advised avoiding mortgage advisers not approved by HUD because they “won’t have the same level of credentials” and “may have questionable motives at best.”

There is often no cost to work with a HUD-approved advisor who will assess the situation and determine if the homeowner qualifies for property tax relief. Such farm exemptions are available in many states but vary widely. Smith said various relief proposals are being considered at local and state levels across the country.

Currently, in Ohio, low-income senior residents with disabilities are eligible for a $25,000 homestead exemption. This means that if the house is worth $100,000, the owner would be taxed as if it were worth $75,000.

All Florida homeowners, on the other hand, are eligible for a property exemption of up to $50,000, but people 65 and older who meet certain income limits can claim an additional $50,000.

A HUD-certified counselor will also be aware of any new or emerging programs aimed at providing property tax relief. And the advisor can help customers see if they are eligible to apply for other home-related savings, such as financial assistance on energy bills.

Don’t: Ignore the bill

According to Smith, opening an envelope containing a large property tax bill tends to elicit a “flight” response from low- and middle-income seniors who lack the resources to pay. Ignoring the problem, however, will make it worse.

Related: Social Security recipients get big raise — but also fall further behind

When property owners fail to pay their property taxes, the local taxing authority will start charging interest, late fees or both on the unpaid amount, further increasing the amount owed. The local government could also put a lien on the house and possibly force a sale.

“Of course, we don’t want it to go that far,” Smith explained. “Before the bill is due, we want seniors or their caregivers to contact a HUD housing counseling agency and connect with a counselor who can help them understand what this bill means and what steps you need to take. then take.”

Also see: The latest problem for seniors: soaring food prices

Do: Opt for a payment plan

Smith said people on fixed incomes often struggle to pay large lump sum quarterly or semi-annual bills. But many tax agencies offer programs where homeowners, especially those in financial difficulty, can qualify for an installment arrangement and pay their property taxes over time.

Cuyahoga County in Ohio, for example, has an “EasyPay” plan in which upcoming payments are automatically deducted each month from a checking or savings account. Paying $291 a month, Smith argues, is “much 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: Get trapped by predatory lenders

Predatory lending is one of the greatest dangers for seniors who find themselves in dire financial straits. Smith said she was alarmed by recent data suggesting the use of payday loans by Americans ages 62 and older has tripled in the past five years, with annual interest rates reaching 372%.

“We’ve had situations where seniors have taken out two, three, or even four payday loans at once to try to pay their taxes, and it’s gobbled up all of their income,” Smith said. “They then are not able to meet any of their other basic needs because they are in this vicious circle of payday lending.”

Reverse mortgages can also be fraught with pitfalls.

They are among the most expensive mortgage products, and because interest is added to the loan each month – and homeowners don’t make payments – reverse mortgage balances grow over time. If a borrower dies, sells the home, or moves out, the loan becomes immediately due.

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Smith recommends talking to a housing counselor before taking out a reverse mortgage and avoiding payday loans altogether.

Do: Watch out for scams

Scammers don’t want to miss this golden opportunity to take advantage of tax-struggling elderly homeowners and could promise easy money or higher social security payments.

Repel the threat by honing your fraud avoidance skills and making sure your loved one knows how to stay away from a scammer, including:

  • Never provide financial or personal information to anyone you don’t know and trust.

  • Don’t click on links in emails from sources you don’t know.

  • Refrain from making immediate financial decisions.

“The key is to be proactive. Don’t wait for someone to offer you a solution,” Billnitzer said. “You can eliminate scam and fraud when you take the initiative to contact a HUD-certified counselor and come up with a plan.”

Judy Stringer is a freelance writer and editor with over 25 years of media experience. Many 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 covers community news and oversees special sections on senior living, wellness and home improvement for ScripType Publishing, a collection of nine monthly magazines in the counties of Summit and Cuyahoga in Ohio.

This article is reproduced with permission from NextAvenue.org, © 2022 Twin Cities Public Television, Inc. All rights reserved.

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