Have you ever wondered what a property tax lien is and how it affects your home? Milwaukee property tax liens may affect homeowners in different ways. If you don’t understand how they work, it’s easy to become overwhelmed and stressed.
In this blog post, we will provide an overview of the Milwaukee property tax system and discuss the personal liabilities for property tax liens. Because if you don’t pay your taxes, there are serious consequences! We will also provide some solutions to resolve a tax lien, including selling your house.
Hopefully, this information will help you better understand how Milwaukee property tax liens work and what to do if you find yourself in this situation. So let’s get started!
The Wisconsin Property Tax System Overview
We all pay taxes in Wisconsin, and part of being a homeowner in Wisconsin includes paying property taxes. These taxes help fund local government services and are based on the value of your home. The amount you pay will vary depending on where you live in the state, but it’s important to remember that these taxes are due every year, regardless of whether or not you sell your house.
Unfortunately, Wisconsin has some of the highest property taxes in the country. The state’s average effective property tax rate is 1.68%, the eighth-highest average of any state in the U.S.
On the bright side, though, that rate is unlikely to increase much in the coming years. This is because Wisconsin passed a law that strictly limits increases in total property tax revenue collected by cities, towns, counties, and school districts.
But just in case you were wondering, the average personal property tax rate in Milwaukee County is 2.53%. That’s more than double the national average tax amount, which is 1.07%. So, for example, if you used the median Milwaukee home value of $167,281, the estimated annual taxes would cost $4,232 (2.53%)!
How do Wisconsin Property Taxes Work?
You can pay property taxes in Wisconsin on two different installment schedules. The first requires full payment of the total amount by Jan. 31, while the second allows for more flexibility, with two equal payments by Jan. 31 and July 31 due dates. Taxes are based on two key numbers: the assessed value of real property and the total property tax rate.
- The assessed value is calculated annually by local assessors in each tax district.
- The real estate tax in Milwaukee is currently 2.53%. Find out other county’s real estate tax rates by clicking here.
So what happens if you don’t pay your property taxes? Continue reading to find out.
Milwaukee Property Tax Liens
Sometimes financial difficulties arise like medical bills, unemployment, the death of a loved one, or an injury, which can prevent a property owner from paying property taxes on time. If this happens, the City of Milwaukee will place a lien on your home, making it a delinquent property.
A property tax lien is a legal claim that is put on a property when the owner falls behind on their property taxes. This is essentially a claim against your home until the tax bill is paid in full.
This claim allows the government (gov) to collect the owed money, plus interest and penalties. However, the lien will stay in place on your tax records until the debt is paid in full, impacting the sale or refinancing of the property.
Personal Liability for Property Tax Liens in Milwaukee
What are the personal liabilities for property tax liens in Milwaukee? If you are the owner of a property that has a lien placed on it for delinquent taxes, you are personally responsible for the debt. This means that the city can come after you to collect the property tax bill that is owed.
In other words, if you are unable to pay the outstanding balance or sell the property, the city has the right to collect the money from the proceeds of the sale or initiate a property tax foreclosure.
Furthermore, if you don’t pay your property taxes in Milwaukee, the city can start a foreclosure and then sell your home. The city can ultimately come after you for the amount due.
In either situation, it’s important to remember that property tax liens are personal liabilities, which means that they will also impact your credit score.
What Happens if You Don’t Pay Property Taxes in Milwaukee
As we discussed, if you don’t pay your property taxes, the municipality will place a lien on your home. This means that you are responsible for paying the taxes plus penalties and interest. The liens will also appear on your credit report and can negatively impact your ability to borrow money or refinance your mortgage.
If you still haven’t paid the taxes after the lien has been placed, the government can take legal action to sell your home to recover the money that is owed. This could result in you losing your home and being forced to find a new place to live.
However, most states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called “redeeming” the property.
In Wisconsin, state law allows people to get a two-year redemption period to pay off all taxes, penalties, interest, and other costs (called “redeeming” the home) before the county can start the process to get title to the property.
But the redemption period is limited to one year under some circumstances, like if the city incurred costs in restoring the property to an erosion-free condition.
After the county gets ownership of your property, it will sell the home to a new owner.
The county can usually sell it back to you if you want to repurchase the home. Generally, you’ll have to make a request to do so before the property is made available for sale to the public. In most cases, it’s cheaper and easier to pay off the delinquent amount before the redemption period expires rather than to repurchase the home after the county takes ownership.
Solutions to Resolve a Tax Lien
If you find yourself with a Milwaukee property tax lien, there are a few solutions that you can explore. Below, we’ll look at three options you may want to consider.
Option #1: Consider Selling Your House
One option is to sell your house. This may be the best solution for you if you can’t afford to pay the taxes or if you don’t want to go through the hassle of dealing with a tax lien. You could use the equity in your home to pay off the tax lien and find a new place to live.
If your home is in good condition and in a good location, you should be able to sell pretty quickly. However, if your home requires some major repairs, is not in a desirable neighborhood, or is outdated, it may take longer to sell and involve making costly improvements. This can be financially challenging, especially if you still have to pay the tax lien.
Another thing to keep in mind if you decide to sell a house in Milwaukee with a tax lien is real estate agent commissions. If you were to hire a listing agent, they charge a 2.5-3% commission upon the sale of your home. If the buyer uses an agent, they will have a commission fee as well, 2.5-3%. So total to sell on the open market with realtors involved with the transaction can cost 5-6% in commissions.
If you were to sell a house using the median home value of $167,281, it would cost $8,364-$10,036 (5-6%) in realtor commissions, which doesn’t include closing costs.
You can always try to sell your house on your own but may still owe a buyer’s agent fee and contribute to closing costs.
Though this may not sound like the best solution, selling your house can be a good option to pay off a property tax lien. However, you may want to consider selling to one of the companies that buy houses in Wisconsin instead of listing with an agent on the MLS.
Cash home buyers in Brookfield, Fox Point, Glendale, or Milwaukee can make you a free no-obligation offer for your home within 24-hours and close in as little as 7-days.
And since you’d be selling directly to the homebuyer, realtors don’t have to be involved with the home sale, which means no costly realtor commissions!
Selling to a “We buy houses Milwaukee” buyer also means you can sell your house as-is, no repairs necessary. Again saving you time and money.
Option #2: Get a Loan to Pay Off the Tax Lien
Another option is to get a loan and use that money to pay off the delinquent taxes. This can be a good solution if you don’t want to or can’t sell your house.
However, this may not be a viable option, given that your credit score can be negatively affected by your property tax lien. In addition, you’ll have to qualify for the loan and be able to make payments.
Another possibility, if you can’t qualify for a loan with a bank, you may be able to get a loan from a private lender. However, this option can be expensive, but it’s better than losing your home.
Ultimately, getting a loan might be a good option if your financial situation is temporary, but if you can’t afford to pay your property taxes every year, you may want to consider selling your home instead.
Option #3: Work Out a Payment Plan
Another option is to work out a payment plan with the city. You can usually set up a tax payment plan by contacting the department that is responsible for collecting taxes. This option may be a better choice if you want to keep your home, and you’re able to make monthly payments until the debt is paid off.
Again this might be a good solution if your financial situation is temporary, but if you can’t afford your Wisconsin property taxes every year, you may want to consider another option.
If you’re unsure what you should do next or what your options would look like, it never hurts to consult with a tax attorney about your specific situation. They can help answer any legal questions you may have.
The Milwaukee property tax lien system can be confusing and daunting for homeowners. Therefore, it’s important to understand the personal liabilities associated with owning a property with a tax lien and the possible solutions.
As you’ve discovered, you do have several options to resolve the lien, selling your house being one of them.
You’ll be able to quickly sell your home, pay off your property tax lien, and move on with your life.
DISCLAIMER: This article is meant for educational purposes only and is not intended to be construed as financial, tax, or legal advice. Cream City Home Buyers always encourages you to reach out to an advisor regarding your own situation.