Two weeks ago, I received my property taxes on my second home. I was surprised by the thickness of the envelope – and then a sheaf of papers and four envelopers tumbled out. I figured it was some hiccup with the stuffing machine. It wasn’t.
Hawaii has some seriously low property tax rates – for comparison, my Honolulu tax bill reflected a payment amount equal to $2.78 per square foot versus Dallas running at $7.72 per square foot. The overall market values of each property are within $100,000 of each other – with Dallas being the lower value.
However, even with such comparatively tiny bills, Honolulu County offered property owners the option of splitting their payments into more manageable chunks. First, I should remind that unlike Dallas, Hawaii already splits their payments into two – one half due in August and the other in February. So all those envelopes in my bill were to further divide half of the annual payment into four smaller chunks to pay.
If this is carried over into the next billing period, that will equate to eight equal payments for a full year of property taxes. You’ll note that Honolulu isn’t giving up a dime in revenue, they’re just allowing owners to make smaller payments at a time when incomes might be gone or severely crimped. A scheme that might keep some people in their homes.
Why doesn’t Dallas offer this? Keep reading.
The more cynical think it’s canny of the county to get some money up-front before any personal financial hell breaks loose – figuring something is better than nothing.
Regardless of interpretation of the move, it gives homeowners breathing room if they need it without costing the county anything except patience.
What About Dallas?
I reached out to John Ames, the Dallas County Tax Assessor (since he doesn’t set rates or assess value, he’s really the collector). He told me there were a few options for homeowners facing a whammy of a bill at a time when funds are low.
First of all, bills are mailed out in October and due by January 31st, but there’s no reason you can’t make multiple payments during those four months. Say you don’t trust yourself around the holidays to not spend your property taxes on presents. Maybe you’re expecting a bonus or other irregular payment you’d like to just send in. Maybe this year there’s a check expected from the government you want to throw at taxes.
If you can’t pay all your taxes by January 31, know that interest accrues only on the unpaid portion. So if you can only pay a portion, pay that portion to save any delinquent interest you can avoid. Also know that delinquent accounts for residential property taxes are turned over to the county’s attorney on July 1.
Homestead Payment Agreement
There’s also something called a Homestead Payment Agreement whereby once every third year, a homeowner can request to make monthly installment payments with no penalty. The catch is that according to HB 1597, this only applies to delinquent taxes – meaning homeowners knowing they have a problem can’t proactively setup a payment plan.
I guess the advice here is to be on the assessor’s doorstep February 1 to minimize any non-payment penalties (which are due until the installment agreement is setup). The plans can run from 12 to 36 months with each payment being of an equal amount. But don’t miss a payment. Penalties up to 35 percent will be added to the total outstanding balance.
Senior Citizens
Older Dallasites have more options. They can split their homestead property tax bill into quarters without any penalty (or interest). The local government can also allow homesteaders to “perform service” for the government instead of paying taxes (Tax Code Section 31.035).
And if you just want to enjoy your golden years without the specter of property taxes at all, you can defer them completely. After age 65, you can stop paying taxes and have them settled out of your estate or when you sell the home. The catch is that you accrue five percent interest on the unpaid balance – which seems a little high (friends in Vancouver report their similar system costs just 1 percent).
Disabled and Veteran’s Options
If you are disabled or a disabled veteran (and unmarried surviving spouse) you can also apply for a payment plan so long as you request a payment plan with your first non-delinquent payment (pre-February 1). Like seniors, these same groups can also defer their property tax payments.
Other Weird Options
In addition to seniors being able to volunteer services in lieu of taxes, school districts can allow qualified volunteers to teach their way out of taxes on their homestead at a junior high or high school district (Tax Code Section 31.036). Even weirder, your employer can volunteer your services to the school district in lieu of paying business property taxes (Tax Code Section 31.037).
What about Bi-Annual Split Payments – In Dallas?
I opened this piece with examples of other places that allow at minimum property taxes to be paid in two installments – to ease the pain. Texas has frightening property tax bills and yet Dallas still lump-sums it in lockstep with the holiday season (very Ho-Ho-Ho).
According to Texas Tax Code Section 31.03 allows the governing body of a taxing unit that collects its own taxes to allow a person to pay one-half of the person’s taxes by Nov. 30 and pay the remaining one-half of the person’s taxes by June 30 without incurring penalty and interest.
So what’s up with Dallas? While the state allows spilt-payments, they have to be enabled by the local taxing body. In this case, Ames said the Dallas County courts, City Council, DISD, Hospitals (and every other line item on property taxes) would have to agree to enable split-payments.
This is a no-brainer – in this of all years. How about it City Hall? I assume if Council passes a resolution, the others would follow (if just to avoid bad press).
It’s a convenience that benefits taxpayers that doesn’t cost anyone a dime. What’s not to love?
If the thought of paying a huge property tax bill come January has you afraid, write to your city council member. It’s just dumb that we don’t offer this.
