Pay your debt and keep your home. Simple, right?
It’s possible for a Tennessean’s house to be sold out from under them – even if they’re paying their mortgage. The reason: property taxes, or rather, property tax non-payment. On one level, this process seems startlingly unfair: a Tennessean is paying off their mortgage, but can’t pay the government what it demands and expects. As a result, their home could go into a tax sale, with a new owner reaping ownership benefits.
This possible scenario is another reason that of all taxes, the property tax is the most hated. Here’s what the National Council of State Legislatures has to say about them, as stated in their article, “The Most-Hated Tax – and What States Are Doing About It.” Three key points kick off NCSL’s analysis:
• “Payments must be made in large lump sums for those who don’t have a mortgage. Unlike sales taxes that are paid in small increments or income taxes that are withheld, property tax bills come with a large sum due.
• “Taxpayers can’t control the amount. Unlike sales taxes and income taxes, which are determined by taxpayer actions, the property tax is based on property value and no amount of tax planning can reduce it
• “Most important, property values have gone through the roof over the last 30 years, with median home prices more than tripling between 1992 and 2022.”
Despite these feelings, in 2021 a “Cap the Tax” petition drive to cap Knoxville property tax increases didn’t get enough signatures to make it on a ballot. Bad organization, feelings of helplessness, or resident apathy? Take your pick.
Many people may believe that given the opportunity government would, in a quick process, wrest from people their houses to re-sell them. However, as in anything involving money and government, it’s not as simple as government pounding on a homeowner’s door to say, “Pay up, or get out.” Instead, elected officials know that many voters, while accepting that taxes are needed to pay for services, view property taxes like a personal assault. This is a reason why Knoxville and Knox County go years between property tax increases.
Different jurisdictions have different approaches. For example, Shelby County holds massive tax sales and winds up bidding on, and owning, many of the properties, Memphis’s WMC-TV News reported in “Homeowners left Homeless: Shelby County owns more tax sale properties than any investor.”
“Action News 5 found most properties sold in Shelby County tax sales aren’t purchased by investors, but are acquired by Shelby County itself…,” the story reported. “An analysis done with the Institute for Public Service Reporting shows of more than 8,000 properties sold in tax sales between 2016 and 2022, Shelby County came to own more than 5,500 of them – nearly 70%.” Institutional investors and individual buyers looking for bargains didn’t see enough value in the properties to buy them, even at bargain prices.
In Knox County, many of the properties in tax sales are blighted or abandoned, and the owners are as easy to find as someone who owes you money. The goal, say county officials, is to get the money owed, not to take the property. Regardless of one’s attitude toward property taxes, non-payment by some means the service-paying burden becomes heavier for everyone else. Also, it’s the rare elected official who wishes to be interviewed about why the revenooers took a home from its owners.
The Knox County trustee is responsible for collecting county property taxes. Trustee Justin Biggs says, “We give every individual an opportunity to try to get these paid; payment plans, bank drafts, and contact them well before they’re on a tax sale list.
“The state requires two years of delinquency before we put a property into a tax sale,” he added. “Before that happens, they receive probably a series of 12 or more contacts from us, typically reminders to pay and explanations of different payment plans they can use.”
If someone receives a notice that they’re delinquent, or if they think they’re headed in that direction, their best first step is to call the trustee’s office at 865-215-2305, or contact one of its satellite offices around the county (search at www.knoxcounty.org/trustee). In Knox County, someone almost has to work at it to have their property taken away. There’s little risk of homeowners losing their homes as long as they cooperate to satisfy the debt. That doesn’t mean it can’t happen. In the end, it’s pretty much up to the individual.