This article is reprinted with permission NextAvenue.org,
Whether the hot housing market is cooling down — as some real-estate analysts have predicted — or not, millions of homeowners have already been burned by the property-tax spikes that accompany their skyrocketing home values. What should you do if you can no longer afford your property taxes?
Nationwide, the property tax bill for a single family home grew 4.4% in 2020, according to Atom Data Solutions. and realAppeal, which helps people appeal their fixed property taxes, Forecast property tax to rise by about 6.5%, on average, in 2021.
According to Michael Bilnitzer, executive director of the ESOP subsidiary of the Cleveland-based Benjamin Rose Institute on Aging, these tax hikes hit financially vulnerable homeowners hardest, including older Americans living on fixed incomes. ESOP, or Empowering and Reinforcing the People of Ohio, provides housing and financial counseling to older adults.
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Although monthly Social Security payments are set for a 5.9% increase in January — the biggest jump in four decades — it’s not enough to help budget-strapped older adults meet rising estate-tax demands.
“Here in Cuyahoga County, property taxes have risen an average of 16%,” Bilnitzer said. “Older adults, who were already struggling to meet their needs, are now facing such huge tax hikes and finding it very difficult to afford old age in their home.”
Billnitzer worries that a bloated property-tax bill could send millions of older homeowners into foreclosure or the hands of unscrupulous scammers and predatory lenders.
ESOP’s consulting director, Antoinette Smith, offers tips to follow to avoid unfortunate consequences.
Do: (right) Get help
The first step, Smith said, is to contact a US Housing and Urban Development-approved consulting agency where you or your loved ones live. HUD provides a map of approved agencies on its housing counseling page, or you can locate a nearby office by calling the agency’s interactive voice system at (800) 569-4287.
“HUD-approved agencies are required to have HUD-certified consultants in person,” Smith said. She advised staying away from HUD-approved mortgage advisors because they “would not have the same level of creditworthiness” and “may have the best of intentions.”
There is often no charge to work with a HUD-approved counselor who will assess the situation and determine whether the homeowner qualifies for property-tax relief. This type of homestead exemption is available in many states but varies widely. Smith said various relief proposals are being considered at the local and state levels across the country.
Currently, in Ohio, disabled, low-income older residents can qualify for a $25,000 homestead exemption. This means that if the home is worth $100,000, the owner would be taxed as if it were $75,000.
In contrast, all homeowners in Florida are eligible for the homestead exemption of up to $50,000, but those 65 and over who meet certain income limits can claim an additional $50,000.
A HUD-approved counselor will also learn about any new or emerging programs aimed at estate-tax relief. And a counselor can help clients see if they qualify 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 estate-tax bill elicits a “flight” response among low- and middle-income older adults who lack the resources to pay. However, ignoring the problem will only make the problem worse.
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When homeowners do not pay their property taxes, the local tax authority will start charging interest, late fees or both on the outstanding amount, making the outstanding amount even higher. The local government may also impose a lien on the home and eventually force the sale.
“Of course, we don’t want it to go that far,” Smith explained. “Before the bill is due, we recommend that older adults or their caregivers contact a HUD housing counseling agency and a counselor who can help them understand what this bill means and help you move forward. What needs to be done.”
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Do: Go to Payment Plan
Smith said people with fixed incomes often struggle to pay large, lump sum quarterly or semiannual bills. But many taxing agencies offer programs in which homeowners, especially those facing financial hardship, can qualify for an installment arrangement and pay their property taxes over time. can.
For example, Cuyahoga County in Ohio has an “EasyPay” plan in which upcoming payments are automatically deducted from a checking or savings account each month. Paying $291 a month, Smith argues, is “digestive” compared to paying half ($1,750) or even a quarter ($875) of a $3,500 tax bill at once. is very easy.
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Don’t: Get caught in the trap of predatory lenders
Predatory lending is one of the biggest threats to older adults who find themselves in financial trouble. Smith said he is concerned by recent data suggesting the use of payday loans by Americans age 62 and older has increased annual interest rates by as much as 372% over the past five years.
“We’ve had some situations where seniors had two, three or four payday loans trying to pay their taxes, and it’s eating up all their income,” Smith said. “They are not able to meet any of their other basic needs because they are in this vicious circle.”
Reverse mortgages can also be fraught with losses.
They are among the most expensive mortgage-loan products, and, because interest is added to the loan each month — and the homeowner isn’t making payments — the balance on a reverse mortgage grows over time. If a borrower dies, sells the home or moves out, the loan becomes payable immediately.
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Smith recommends talking to a housing counselor before taking out a reverse mortgage and avoiding payday loans altogether.
Do: Beware of Scams
Scammers don’t want to miss this golden opportunity to take advantage of tax-stricken old homeowners and promise easy money or higher Social Security payments.
Remove the threat by brushing up on your fraud-avoidance skills and making sure your sweetheart knows how to stay out of a scammer’s crosshairs, including:
“The key is to be proactive. Don’t wait to come to you with a solution,” Billnitzer said. “You can keep scams and fraud out of the game when you take the initiative to contact a HUD-approved counselor and come up with a plan. can get out.”
Judy Stringer is a freelance writer and editor with over 25 years of experience contributing to media outlets. Many of her frequent articles appear in Crane’s Cleveland business, where she also writes for Crane Content Studio, the paper’s custom content division. In addition to business, she covers community news and oversees special sections about senior life, wellness, and home improvement for ScribeType Publishing, a collection of nine monthly magazines in Summit and Cuyahoga counties in Ohio.
This article is reprinted with permission NextAvenue.org, © 2022 Twin Cities Public Television, Inc. All rights reserved.
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