After a Loved One’s Death, Who Should Pay the Property Taxes?

When a loved one dies owning a home or land, the taxing authorities will look for a responsible party to send the tax bill to.  If they send the bill to you, should you pay it?  Generally, you should ensure the taxes are paid only if you’ve been appointed the estate’s executor or administrator, or if you’ve already received a deed to the property from the estate. Otherwise, the answer is usually no.

Being the closest relative doesn’t make you personally liable for the decedent’s property taxes. You owe those taxes only if you intend to maintain the property as part of your duties or ownership. Should you pay the property taxes because you anticipate owning the property? Usually, that’s not a good idea.  Paying simply because you expect to inherit is risky because you’re paying taxes on the assumption you’ll own the property or be reimbursed, and that may not happen. While unpaid taxes can eventually lead to foreclosure, taxing authorities typically move slowly. Rushing to pay when no lawsuit or sale is threatened can be premature and may not be necessary.

If you will end up as only a partial owner once the estate is settled, paying the full tax bill effectively becomes an interest-free loan to the other heirs or beneficiaries, with no guarantee of repayment. And if the plan is to sell the property, delinquent taxes (with penalties and interest) are typically paid at closing from the sale proceeds, which means an upfront advance may be avoidable unless you are extremely concerned about the tax penalties or foreclosure.

We frequently meet clients who inherited a fractional interest from a long-deceased relative but never had title properly established through probate or other legal processes. In many of these cases, one well-meaning family member has been paying taxes for years hoping to be repaid only to discover that the cost to fix the title can exceed the property value itself. The tax office will ultimately collect what is owed, but it doesn’t have to come from your pocket. Before you voluntarily pay taxes on property you do not clearly and completely own, carefully weigh the risks, timing, and likelihood of reimbursement.

If you’ve received a property-tax bill after a death, Pyke & Associates can help you evaluate your options. Contact us today to schedule a consultation.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.