What Happens If I Don't Pay Property Taxes in Idaho?

People who own real property must pay property taxes. The government uses the money these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.

When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states, including Idaho, have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.

If you don't pay your real property taxes in Idaho, the county will eventually get title to your home through a tax deed process and then sell the property to a new owner. Fortunately, you'll have some time to get current on the delinquent amounts and prevent a tax sale.

What Are the Consequences of Not Being Able to Pay Property Taxes in Idaho?

When you fail to pay your property taxes in Idaho, the county gets a lien on your home for the delinquent amount. (Idaho Code § 63-1003.)

How Long Can You Go Without Paying Property Taxes in Idaho?

Once the property taxes are three years delinquent, the county will take title to the home through a "tax deed" process. You'll get notice of the delinquency and the opportunity to pay the taxes to stop the process (called "redeeming" the property"). (Idaho Code § 63-1005.)

Notice You'll Receive Before the County Gets a Tax Deed

Before the county gets a tax deed, the county tax collector will send you a notice by certified mail, return receipt requested, no more than five months and no less than two months before the date the tax deed will issue. (Idaho Code § 63-1005.)

If the notice is returned undelivered, the tax collector must publish a summary of the notice in a newspaper at least once a week for four consecutive weeks, with the last publication being no more than two months and no less than 14 days before the tax deed issues. (Idaho Code § 63-1005.)

You Get a Hearing to Dispute the Delinquency (or You Can Pay Off the Debt)

You also get the right to a hearing to dispute the delinquency. The county takes title to your home if you don't get caught up or prevail at the hearing. (Idaho Code § 63-1006.)

Public Auction to Sell Your Idaho Home for Non-Payment of Property Taxes

Then, the county will hold a public auction no later than 14 months after the tax deed issues. The county will sell the home to the highest bidder at the auction. (Idaho Code § 31-808.)

But the bid generally must meet a minimum threshold: the amount of overdue taxes, interest, and costs. The board of county commissioners has the right to accept or reject a bid for a lesser amount. (Idaho Code § 31-808.)

If the home doesn't sell at the auction, the county can sell it at a subsequent auction or a private sale. (Idaho Code § 31-808.)

Can I Get My Idaho Home Back (Redeem It) After the County Gets a Tax Deed?

You can generally redeem (pay the delinquent amounts and save your home) up to:

• when the county enters into a contract of sale or
• the property is transferred by county deed to a new owner. (Idaho Code § 63-1007.)

If neither of these happens to terminate the right of redemption earlier, the right to redeem expires 14 months after the tax deed issued. (Idaho Code Ann. § 63-1007).

How Much Does It Cost To Redeem in Idaho?

To redeem the home, you'll have to pay:

• the past-due taxes
• late charges
• accrued interest (1% per month) (Idaho Code Ann. § 63-1001), and
• costs, including title search costs and other professional fees. (Idaho Code Ann. § 63-1007).

If you redeem, you regain title to the home. (Idaho Code Ann. § 63-1007).

Notice Before the County Sells the Home to a New Owner

Before your home is sold to a new owner at an auction, the county must publish notice in a newspaper at least ten calendar days before the sale. (Idaho Code § 31-808.)

Redemption Period After the County Sells the Home to a New Owner

After the county sells the home, there is a one-year period during which you can redeem the property if you can prove that the tax deed process was irregular (that is, the county did not follow proper procedures). (Idaho Code Ann. § 63-1011).

What Happens to My Mortgage in a Tax Sale?

In many cases, when a home has a mortgage on it, the loan servicer collects money from the borrower as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.

If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, your loan servicer will probably pay the delinquent amount and then bill you for them. But why is the servicer concerned about unpaid property taxes? Because a property tax lien has priority.

Property Tax Liens Have Priority Over Other Liens

Property tax liens almost always have priority over other liens, including mortgage liens and deed of trust liens. (For purposes of this discussion, the terms "mortgage" and "deed of trust" are used interchangeably.)

Because a property tax lien has priority, mortgages get wiped out if you lose your home through a tax deed process. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this from happening. Most mortgages have a clause allowing the lender to add the amount it paid to your loan balance. You'll then have to make repayment arrangements with the servicer.

Your Mortgage Lender Might Foreclose

The terms of most mortgage contracts require the borrower to stay current on the property taxes. If you don't reimburse the servicer for the tax amount it paid, you'll be in default. The servicer can then foreclose on the home in the same manner as if you had fallen behind in monthly payments.

Your Servicer Might Set Up an Escrow Account

Your servicer will probably set up an escrow account for the loan after demanding repayment of the amount it paid for the taxes, penalties, and interest (assuming you repay this tax debt). Each month, you'll have to pay approximately one-twelfth of the estimated annual cost of property taxes—and perhaps other expenses, like insurance—along with your usual monthly payment of principal and interest. This money goes into the escrow account.

The loan servicer then pays the taxes and other escrow items on your behalf through the escrow account.

What Gives the Servicer the Right to Set Up an Escrow Account?

Many mortgages have a clause allowing the lender to establish an escrow account at any time it chooses. The servicer sets up and manages the account on behalf of the lender.

To find out if and when the lender can set up an escrow account for your loan, read your mortgage contract and any other relevant documentation you've signed, like an escrow waiver.

Why Having a Mortgage Escrow Account Might Not Be Bad

The downside to having an escrow account is that you'll have to make a bigger monthly payment to the servicer. On the positive side, having an escrow account saves you from coming up with a large amount of money when tax bills, and perhaps other bills, are due.

What Options Do I Have If I Can't Afford to Pay My Property Taxes in Idaho?

Even though you can get your home back after the county gets a tax deed up until the time the county resells the home to a new owner (and sometimes longer), in most cases, it is generally better to take action before this happens. You might be able to make your taxes more affordable.

For example, you could:

• try to reduce the amount you owe by appealing the tax assessor's value of your home if you think it's not right or
• investigate whether you are eligible for a property tax abatement.

Getting Help

Talk to a foreclosure lawyer, tax lawyer, or real estate lawyer if you're facing a tax sale in Idaho and have questions about the process or need help redeeming your property.