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Should You Pay Your Property Taxes While Challenging Your Tax Bill?

Payment of contested property taxes

Taxpayers are all too familiar with the idea of penalties and interests allocated to unpaid tax obligations. When you go to make a payment, you’re hit with a higher than expected balance that can make paying off the total seem like an impossible task. So what should property taxpayers do when they disagree with their tax bill- pay the contested amount, or wait until the appeal process is over?

The answer is: it depends on the state, county, and/or town in which the property is located; however, most property taxpayers should pay their contested bill promptly to avoid penalties and interest charges. The majority of taxing jurisdictions in the United States agree that penalties and interest must be applied to unpaid property taxes. For example, in New Hampshire, taxpayers are not required to pay property taxes while they are appealing; but the taxing jurisdictions impose a 12% interest charges to unpaid taxes. Even though the New Hampshire cities and towns issue 6% interest on refunded property taxes, any potential interest on overpaid taxes may be dwarfed by the interest charges assigned to the remaining outstanding amount.

So while taxpayers may not be required to pay contested property tax obligations by law, taxpayers should consider the economic incentives of paying taxes promptly regardless of appeal status before withholding tax payments- penalties and interest on unpaid taxes may equal or exceed potential tax savings.

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