9 ms·

Can someone point me to the laws and regulations that allow this? Someone who owns their home completely (with no mortgage) can lose the entirety of the home du

by acchow 13y ago

Can someone point me to the laws and regulations that allow this? Someone who owns their home completely (with no mortgage) can lose the entirety of the home due to unpaid taxes? Even if the value of the home far exceeds the tax debt? This is mindboggling to me.

mynameishere 13y ago
Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.
- rch 13y ago
  It has always seemed to me that property taxes are a completely incorrect idea; far more onerous than, for instance, the estate tax. Have there been any serious efforts to get rid of them?
  - rwmj 13y ago
    Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum). The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax). http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/03/in-defense-of-property-taxes.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada: http://www.interstice.com/~drewes/allodial.html http://www.interstice.com/~drewes/allodial.html
    - bolder88 13y ago
      Why not just go the whole hog and tax all property. eg you buy a laptop, you have to pay the government a tax each year to keep it. Why just apply it to houses? May as well just prohibit people from owning property. Personally, I think such taxes are a massive disincentive for people to do well. As soon as you have enough money to buy a house, you are penalised for it. Luckily in the UK, we don't have property tax, although we do have other taxes just as disgusting and unfair - stamp duty, inheritance tax, council tax.
      - rwmj 13y ago
        In effect we do have a property tax on laptops, but for convenience you pay it up front (VAT @ 20% of the value). It pays for all the same things such as helping the police to defend your laptop from being stolen, and paying for the ports and roads along which your laptop was imported (as well as the national debt which was increased when you imported it). Council tax is the UK property tax. It's a very low-rated and regressive tax, but it's a property tax.
        robk 13y ago
        Good luck getting any value from the UK police of your laptop is stolen.
      - asmithmd1 13y ago
        In Massachusetts they do: "All personal property situated in the commonwealth is subject to tax, unless specifically exempt by law" http://www.mass.gov/dor/local-officials/municipal-finance-law/frequently-asked-questions-personal-property.html http://www.mass.gov/dor/local-officials/municipal-finance-la...
        brightsize 13y ago
        True. When I lived there in the 80s, I remember getting fairly hefty annual bills for excise tax on my car. I don't know if they still do that or what classes of property were routinely taxed at the time.
- xsmasher 13y ago
  The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt. What else could the government do, put the homeowner in debtor's prison?
  - muzz 13y ago
    It auctions the lien, not the house. The new lien holder then foreclosures on the house and takes all the remaining equity.
    - xsmasher 13y ago
      You are correct, they buy the lien and have to foreclose later. I'm still curious what myname would propose as an alternative collection scheme. The article mentions that Michigan stopped doing tax lien sales, so I checked up on what they do now: https://www.tax-sale.info/html/index/page/general https://www.tax-sale.info/html/index/page/general SPOILER: > The properties are then sold by deed at auction. Not much of an improvement over the lien process; just a faster foreclosure.
  - caf 13y ago
    In some places they would garnish the debtors income.
deleted 13y ago
[deleted]
aheilbut 13y ago
What is also crazy about it is that the government is apparently not setting a high enough price for the liens. If they correctly priced the 'option' that the lien wouldn't be paid and the buyer could foreclose, then it wouldn't be so attractive for the predatory buyers. So the government is allowing itself to get ripped off too.
- raverbashing 13y ago
  Well, theoretically the price of the lien should never be bigger than the price of the debt. The price should be (debt x odds of getting payed). These are usually bought in bulk But of course, with this "new method" it makes sense to be higher.
- fnordfnordfnord 13y ago
  Well, in Texas the liens are sold at auction. But yeah.
  - muzz 13y ago
    The article clearly states that the liens in DC are sold at auction.
fnordfnordfnord 13y ago
The local county government can put a lien on your real property for failing to pay your property taxes, in some places, even for not mowing your lawn (an exaggeration of property maint. codes). In Texas, investors can buy a "Tax Deed" at auction. The property owner has two years to buy the lien back, for a defined price, IIRC the taxes owed + 50% for each year. After the 2 yr repayment window, the purchaser of the tax lien gets the title to the property. http://www.nuwireinvestor.com/articles/how-texas-tax-sales-work-51295.aspx http://www.nuwireinvestor.com/articles/how-texas-tax-sales-w... http://www.dallascounty.org/department/pubworks/documents/StruckListtoPost.pdf http://www.dallascounty.org/department/pubworks/documents/St...
- Diederich 13y ago
  An example of a city that does put a lien on the property you're living in if you don't mow your lawn properly: http://en.wikipedia.org/wiki/Bella_Vista,_Arkansas http://en.wikipedia.org/wiki/Bella_Vista,_Arkansas First-hand experience.
- helmut_hed 13y ago
  Are tax liens different from other kinds? It's my impression that if e.g. a lender repossesses, they sell the house, pocket what you owe plus fees, and have to give you the rest back. It's strange to think it would be different for unpaid property taxes. Was Coleman truly "left with nothing" or did he get a portion of the sale proceeds?
  - fnordfnordfnord 13y ago
    The rights of the tax lien holder trump any other claims, AFAIK. That's one reason that mortgagors want you to escrow your annual property taxes with them. edit: IRS liens in effect before the sale go with the property, and can delay the new owner in getting a title policy.
  - deleted 13y ago
    [deleted]
- nthj 13y ago

by acchow 13y ago

mynameishere 13y ago

Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.

rch 13y ago
It has always seemed to me that property taxes are a completely incorrect idea; far more onerous than, for instance, the estate tax. Have there been any serious efforts to get rid of them?
- rwmj 13y ago
  Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum). The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax). http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2013/03/in-defense-of-property-taxes.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada: http://www.interstice.com/~drewes/allodial.html http://www.interstice.com/~drewes/allodial.html
  - bolder88 13y ago
    Why not just go the whole hog and tax all property. eg you buy a laptop, you have to pay the government a tax each year to keep it. Why just apply it to houses? May as well just prohibit people from owning property. Personally, I think such taxes are a massive disincentive for people to do well. As soon as you have enough money to buy a house, you are penalised for it. Luckily in the UK, we don't have property tax, although we do have other taxes just as disgusting and unfair - stamp duty, inheritance tax, council tax.
    - rwmj 13y ago
      In effect we do have a property tax on laptops, but for convenience you pay it up front (VAT @ 20% of the value). It pays for all the same things such as helping the police to defend your laptop from being stolen, and paying for the ports and roads along which your laptop was imported (as well as the national debt which was increased when you imported it). Council tax is the UK property tax. It's a very low-rated and regressive tax, but it's a property tax.
      - robk 13y ago
        Good luck getting any value from the UK police of your laptop is stolen.
    - asmithmd1 13y ago
      In Massachusetts they do: "All personal property situated in the commonwealth is subject to tax, unless specifically exempt by law" http://www.mass.gov/dor/local-officials/municipal-finance-law/frequently-asked-questions-personal-property.html http://www.mass.gov/dor/local-officials/municipal-finance-la...
      - brightsize 13y ago
        True. When I lived there in the 80s, I remember getting fairly hefty annual bills for excise tax on my car. I don't know if they still do that or what classes of property were routinely taxed at the time.
xsmasher 13y ago
The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt. What else could the government do, put the homeowner in debtor's prison?
- muzz 13y ago
  It auctions the lien, not the house. The new lien holder then foreclosures on the house and takes all the remaining equity.
  - xsmasher 13y ago
    You are correct, they buy the lien and have to foreclose later. I'm still curious what myname would propose as an alternative collection scheme. The article mentions that Michigan stopped doing tax lien sales, so I checked up on what they do now: https://www.tax-sale.info/html/index/page/general https://www.tax-sale.info/html/index/page/general SPOILER: > The properties are then sold by deed at auction. Not much of an improvement over the lien process; just a faster foreclosure.
- caf 13y ago
  In some places they would garnish the debtors income.

deleted 13y ago

[deleted]

aheilbut 13y ago

What is also crazy about it is that the government is apparently not setting a high enough price for the liens. If they correctly priced the 'option' that the lien wouldn't be paid and the buyer could foreclose, then it wouldn't be so attractive for the predatory buyers. So the government is allowing itself to get ripped off too.

raverbashing 13y ago
Well, theoretically the price of the lien should never be bigger than the price of the debt. The price should be (debt x odds of getting payed). These are usually bought in bulk But of course, with this "new method" it makes sense to be higher.
fnordfnordfnord 13y ago
Well, in Texas the liens are sold at auction. But yeah.
- muzz 13y ago
  The article clearly states that the liens in DC are sold at auction.

fnordfnordfnord 13y ago

The local county government can put a lien on your real property for failing to pay your property taxes, in some places, even for not mowing your lawn (an exaggeration of property maint. codes). In Texas, investors can buy a "Tax Deed" at auction. The property owner has two years to buy the lien back, for a defined price, IIRC the taxes owed + 50% for each year. After the 2 yr repayment window, the purchaser of the tax lien gets the title to the property. http://www.nuwireinvestor.com/articles/how-texas-tax-sales-work-51295.aspx http://www.nuwireinvestor.com/articles/how-texas-tax-sales-w... http://www.dallascounty.org/department/pubworks/documents/StruckListtoPost.pdf http://www.dallascounty.org/department/pubworks/documents/St...

Diederich 13y ago
An example of a city that does put a lien on the property you're living in if you don't mow your lawn properly: http://en.wikipedia.org/wiki/Bella_Vista,_Arkansas http://en.wikipedia.org/wiki/Bella_Vista,_Arkansas First-hand experience.
helmut_hed 13y ago
Are tax liens different from other kinds? It's my impression that if e.g. a lender repossesses, they sell the house, pocket what you owe plus fees, and have to give you the rest back. It's strange to think it would be different for unpaid property taxes. Was Coleman truly "left with nothing" or did he get a portion of the sale proceeds?
- fnordfnordfnord 13y ago
  The rights of the tax lien holder trump any other claims, AFAIK. That's one reason that mortgagors want you to escrow your annual property taxes with them. edit: IRS liens in effect before the sale go with the property, and can delay the new owner in getting a title policy.
- deleted 13y ago
  [deleted]
nthj 13y ago