A tax sale (also called tax auction or tax foreclosure) is the government's last resort for collecting unpaid property taxes. When taxes remain delinquent long enough, the county can sell your property at public auction to recover the tax debt.
The timeline varies by state and county, but properties typically must be delinquent for 1-3+ years before reaching tax sale. Texas allows tax sales after giving the owner time to pay; California requires a 5-year redemption period before auction.
At a tax sale, investors bid on the property or the tax debt. The homeowner may lose all equity above the tax debt owed, depending on state law and sale proceeds.
Tax sales represent the worst-case scenario for delinquent taxes. Homeowners lose their property—often for a fraction of its value—while investors profit from the distress.
Avoiding tax sale requires action well before you reach this point:
• Pay what you can — Partial payment may delay proceedings
• Request a payment plan — Most counties prefer payment over auction
• Claim exemptions — Reduce your bill going forward
• Appeal your assessment — Lower values mean lower taxes
• Consider tax deferral — Seniors and disabled may qualify
Don't wait until you're in crisis. Lower your tax burden while you have options.
A Texas property goes to tax sale:
Original tax debt: $15,000 (multiple years delinquent)
Penalties, interest, fees: $8,000
Total owed: $23,000
The property (worth $200,000) is sold at auction:
Winning bid: $85,000
After paying the $23,000 tax debt, the remaining $62,000 goes to the former owner (this varies by state—some states don't return excess proceeds).
The investor now owns a $200,000 property for $85,000. The homeowner lost their home and most of their equity.
Timelines vary. Texas can sell properties relatively quickly once delinquent, while California requires a 5-year redemption period. Contact your county tax collector to understand your specific timeline and options.
Some states offer a redemption period after tax sale during which you can reclaim the property by paying the debt plus costs. Texas has a limited redemption period (6 months to 2 years depending on property type). Once it expires, the sale is final.
Tax liens take priority over mortgages. If your home is sold at tax sale, the mortgage lender may lose their security interest. This is why many lenders require escrow—they want taxes paid to protect their investment.