Property Tax Conundrum

I wish I could say that all the tax issues I ran into when I put my rental house into a trust have been resolved.

Oh, how I wish I could say that.

I still have a over $10k delinquent tax bill (lawyer keeps telling me not to pay. My house won’t go up for auction for another 4.5 years so I am listening to him for now. Also, I don’t have 10k so there’s that.)

 

And I just got this year’s bill.

Even though it is down significantly from the $9,098 bill I was previously given, it has still more than doubled. On December 10 my first installment of $1,750.81 is due. (For context, my total property tax last year was just over $1,400.)

I called my lawyer and am sending the papers he’s requested. But for now I am assuming this is what I owe.

 

What Do I Do?

I feel like I have several options with how to pay and none of them are any good.

First I have to decide whether to pay one installment or both. Usually I pay both installments in December. First, so I don’t forget to pay in Spring. But also so the entire amount will count towards this year’s taxes.

Given the uncertainty of whether this is the correct amount, I am leaning towards just paying December’s portion. It’s already more than I normally pay for a full year. If it does go down after I pay it the second installment will hopefully be prorated.

With that out of the way I have several options for paying the first installment. None of them are any good.

 

Option 1: Take the Money Out of Savings

Pros: Tax bill will be paid and I don’t have to worry about it.

Cons: It has taken me so long to save the $6k I have in the bank that I don’t want to deplete it unless there is a life or death emergency. Especially because I am in the process of paying down $28k of credit card debt, I won’t have a ton of extra to put into savings for at least a year.

 

Option 2: Pay Minimums on Debt to Pay 1st Installment in Cash

Pros: Tax bill will be paid and I won’t have to worry about it.

Cons: It’s possible that I won’t have enough time to accumulate the cash needed to pay the bill off, even if I drop my debt payments to their minimums. It will also make it harder to pay off the credit cards before their promotional 0% interest rates are up, costing me money in the long run.

 

Option 3: Put Tax Bill on Credit Card

Pros: Putting the bill on a credit card will give me an extra month to save/find the cash needed to pay it. The tax benefit will still be credited to 2017 year, even though I won’t have to pay from my bank account until 2018. I can put it on my 1.5% cash back credit card.

Cons: More credit card debt. The service fee to pay with credit is more than 1.5%. If I don’t come up with the money by the end of January I encounter the same problem I have with option 2. I’ve plugged the numbers into my spreadsheet (that only includes my 9-5 wages and rental income, not mystery shopping income) and I am able to pay the bill when it comes due in January. But a lot can happen between now and then.

 

Right now Options 1 and 3 look the best. I am leaning towards three but am open to hearing what anyone else thinks. I know that part of the reason I have so much on credit cards is my mindset, so I am willing to listen to opinions that challenge them.

One Response

  1. luxuriouslythrifty

    Agh! It’s like being caught between a rock and a hard place. Perhaps go with what will cost you the least money in the most likely scenario. Hope it works out.

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