What Are the Benefits and Risks of Commercial Property Tax Loans?

When a property owner starts to fall behind on their commercial property taxes, sometimes a loan may seem like a viable option to get caught up or possibly ahead. While there are some significant benefits to obtaining a commercial property tax loan, like all financial gambles, they can be a double edged sword.

Here are some of the reasons why many business owners view a property tax loan as an appealing financial move, and why others should think twice before signing the dotted line of a loan contract.

Property Tax Loans Help Avoid Costly Penalties

Once you miss the deadline for your property tax payments, a 7 percent penalty and interest fee is added to your account each month. Not only does this make your back taxes harder to pay off, but it also puts your property one step closer to a devastating lien and foreclosure.

A property tax loan can help settle your back taxes and ensure that your property tax account doesn’t remain in danger of becoming a lost cause.

Fast Solution, with Potential Low Monthly Payments

Depending on your lender, property tax loans can be approved quickly and could come with low monthly payments that are affordable to meet every month.

Keep in mind that this is still a debt you acquire and that some Texas counties are willing to work out payment plans with property owners who cannot afford to pay their property taxes at once on Feb 1. One should always weigh what options are truly more sustainable for their current financial situation.

Should You Get a Property Tax Loan?

Getting into a property tax loan may seem like a great way out of a delinquent tax problem, but are you really resolving the problem?

Unless you already know that you’ll be able to pay back your property tax loan based on the agreed terms of your contract, getting these loans can still put your property at risk.

If you don’t have the money to pay back your loan, you’ve only borrowed from one entity to pay back another and are still in the same amount of debt (if not more!). If your loan is not paid on time, your lender can start the foreclosure process and have your property sold off at a public auction. 

Can You Avoid a Loan with the Help of a Property Tax Consultant?

It’s understandable that many commercial real estate owners would turn to a property tax lender as a quick way to resolve a property tax issue. However, you should always keep in mind that the issue may not even be your lack of liquidity.

Tax assessors make mistakes that end up costing property owners more tax money each year than what’s necessary. Unless a property owner catches these mistakes, it’s likely that the taxing entity won’t even realize the issue and continue charging exorbitant tax fees.

A property tax consultant can help you review your property taxes, any changes you’ve made to your property, as well as the value of related property in your area. With basic and public tax information, we can easily determine if your property has not been assessed correctly and can help you start the appeals process with your assessor. 

If your appeal is accepted, your property taxes could be significantly reduced, and you may no longer require the need of a property tax loan to make timely payments.

Get Help Budgeting and Forecasting Your Property Taxes with The Hegwood Group

If you are a commercial property owner who is having a hard time keeping up with property tax payments, reach out to The Hegwood Group for assistance. Even if you aren’t eligible for a property tax appeal, we can help you get back on track through efficient budgeting and forecasting of your future property tax payments. We want to hear from you and find out how we can improve your tax situation. Contact us today to schedule an appointment with one of our tax consultants.