A property tax deferral allows temporary relief from paying property taxes, but must be repaid in the future with interest. Eligibility criteria may include age, health, or income level, and the program may be operated at the state level. It is not the same as property tax forgiveness.
A property tax deferral is an opportunity to receive a temporary break from paying property taxes to a government revenue agency. Depending on the structure of the deferral program, the deferral amount may be covered by funds provided by a state or other jurisdictional agency, provided that the amount will be repaid at a later date. Most property tax deferment programs have qualifications that applicants must meet in order to be eligible for this type of property tax assistance, and they must stay current on your repayment plan to remain eligible for future assistance.
It is important to note that a property tax deferral is not the same thing as a property tax forgiveness. With the latter, the taxpayer is granted a one-time release from paying all or part of the property taxes owed. Remission plans do not include an obligation to repay the canceled obligation. In contrast, a property tax deferral requires repayment at some point in the future, usually with the help of some sort of plan that allows the taxpayer to settle the deferral in monthly installment payments. Most plans will also require you to assess a small amount of interest on what amounts to a loan to cover the deferral.
The criteria for getting a property tax deferral usually involve factors such as age, health or income level. In some jurisdictions, households with an annual gross income below a certain amount may be eligible to participate in a deferral program. Other jurisdictions provide for temporary deferrals for taxpayers who are past retirement age. In yet other situations, homeowners who have become disabled and live on a fixed income may also benefit from this type of assistance.
While property taxes may be assessed and are payable to a local jurisdiction such as a municipality, county or parish, it is not unusual for a property tax deferral program to be operated at the state or provincial level. A common structure is for the property owner to submit a formal application for assistance to the agency managing the deferment funds and be accepted into the program. The agency then pays a fixed percentage of the property taxes owed, leaving the taxpayer with only three percent of the settlement obligation. At that point, the agency and the taxpayer agree on a repayment schedule that typically involves initiating payments to the agency several weeks or months after the payment to the debt collector’s office is made. Other plans defer repayment until the property is sold at some future point or until the property owner no longer qualifies for participation in the deferral plan.
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