Can I Sell My House If I'm Behind on Property Taxes?

If you've fallen behind on your property taxes and are considering selling your home, you may be worried that the unpaid balance will prevent you from putting the property on the market.

In many cases, you can still sell a house if you owe back property taxes. However, the outstanding taxes generally need to be addressed as part of the transaction so ownership can transfer properly to the buyer.

For Connecticut homeowners, the important questions are how much you owe, whether a lien affects the property, and whether your expected proceeds from the sale will be enough to satisfy what needs to be paid.

Do I Have to Pay Back Property Taxes Before Selling?

You don't necessarily need to wait until you've personally paid every dollar of delinquent property taxes before beginning the selling process.

In Connecticut, property taxes are collected at the municipal level. If taxes on the property are delinquent, they can create a lien that needs to be addressed in connection with transferring clear title.

Depending on the circumstances, the outstanding amount may be able to be satisfied from the proceeds of the home sale at closing.

For example, if your home sells for enough to pay your remaining mortgage, outstanding property taxes, and other applicable selling expenses, those obligations may be handled as part of the closing process before you receive your remaining proceeds.

The exact handling of your situation should be reviewed with the appropriate professionals involved in your transaction.

What Happens to Unpaid Property Taxes When You Sell?

When you sell a Connecticut home, title work is performed before closing.

This process helps identify liens or other claims that may affect ownership of the property. If delinquent municipal property taxes are associated with the home, they can't simply be ignored because the property is changing owners.

The amount owed needs to be determined so it can be addressed appropriately before or at closing.

That's why it's helpful to identify the issue early rather than discovering it shortly before you're supposed to transfer ownership.

If you know you're behind on property taxes, tell your Realtor and real estate attorney at the beginning of the process so everyone can plan accordingly.

Your Home Equity Becomes Especially Important

If you're selling with unpaid property taxes, one of the biggest considerations is whether you have enough equity in the home to cover everything you owe.

Home equity is essentially the difference between your property's current market value and the amount you still owe against it.

Imagine your home could sell for $500,000 and you owe $300,000 on your mortgage. You potentially have substantial equity available before accounting for property taxes and other selling expenses.

If you owe $10,000 in delinquent property taxes, there may still be enough proceeds from the transaction to satisfy the tax balance and mortgage while leaving money remaining for you.

If your mortgage balance and other obligations are much closer to the home's expected sale price, however, the situation may require more careful planning.

This is why determining your home's realistic market value is an important first step.

Don't Assume You Can't Sell

Homeowners who fall behind on property taxes sometimes delay contacting a Realtor because they assume the issue makes selling impossible.

That can be a mistake.

The longer delinquent taxes remain unpaid, the more important it becomes to understand exactly where you stand and what options may be available.

Selling the property may potentially provide a way to satisfy the outstanding taxes using accumulated home equity, depending on the numbers involved.

Rather than assuming you need to solve everything before speaking with anyone, start by gathering information.

Find out how much you currently owe your municipality, your approximate mortgage payoff, and what your home may realistically sell for in today's market.

What Should I Do Before Listing?

If you're considering selling a Connecticut home while behind on property taxes, preparation can make the process much easier.

Start by contacting the tax collector in the municipality where the property is located to confirm your current balance. Connecticut's Office of Policy and Management notes that questions about individual real-property tax bills should be directed to the local tax collector.

Next, determine your remaining mortgage balance and get an accurate estimate of your home's current market value.

Those numbers give you a much clearer picture of whether your anticipated proceeds may be sufficient to cover the obligations associated with the property.

You should also involve your real estate attorney early so the legal and title aspects of your specific situation can be properly addressed.

Selling a Connecticut Home With Back Property Taxes

Being behind on property taxes doesn't automatically mean you're unable to sell your house.

The bigger issue is making sure the delinquent taxes and any related lien are properly handled so the property can transfer to the new owner. If you have sufficient equity, the proceeds from your sale may potentially help satisfy those obligations as part of the transaction.

Every situation is different, particularly when mortgages, liens, or other debts are involved. Getting an accurate picture of your home's value and the amounts owed is the best place to start.

If you're considering selling a home with unpaid property taxes in West Hartford, Avon, Farmington, Simsbury, Canton, Granby, Manchester, Newington, Rocky Hill, South Windsor, or anywhere in Hartford County, I can help you understand what your property may be worth in today's Connecticut real estate market and develop a selling strategy based on your circumstances.

Adam Cannon, Realtor
Coldwell Banker Realty | West Hartford