If you are over 65, you can choose to defer paying your property taxes on your homestead.  This almost sounds too good to be true, but realize, it is a deferral of taxes, not a forgiveness of them.  However, if we could defer all of our taxes until we die that would be a dream.  So, in this one instance where deferral is possible, is it something you should consider?

First, to obtain your deferral, you cannot simply fail to pay your taxes.  You must apply with your appraisal district for such a deferral and be approved.  In Dallas County, the form can be found at this website:  https://www.dallascad.org/forms.aspx  Any penalties or interest that have accrued before your deferral is approved are not waived and these penalties and interest can be very high.

The deferred taxes become due 180 days after the homeowner ceases to occupy the home as their residence (either because they have moved or they have died).  This short six-month deadline places a premium on quickly resolving any estate and reselling the property.

The two clear disadvantages, which will discourage many from using this deferral, is that you are slowly eating away at the equity of your property and the past due balance accrues interest.  Normally, the interest rate on past due property taxes is 1% a month (12% annually), but the rate for deferred property taxes is only 5% a year.  Five percent is now competitive with mortgage loan rates.

So, who should consider this deferral?  If you are over age 65 and struggling with cash flow to meet your basic needs, deferring the taxes is probably a good idea.  If paying the taxes is causing you to consider selling your home, deferral is an option to be considered.  If you are considering going into debt, taking out a higher interest reverse mortgage, or using credit cards to finance past-due taxes, you should definitely consider this option.  Most solvent homeowners will continue to pay their taxes when they are due and avoid any interest and penalties.  That is wise for many, but if your taxes become too great a burden, please promptly investigate this deferral option.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.