The Best Homeowner Tips For Getting Rid Of Tax Debt
We understand just how difficult it can be to keep up with outstanding debt. Whether you have tax bills that are long overdue, or if you’ve steadily started to fall behind on payments, sometimes all you want to do is forget about having to pay anything at all. Unfortunately, as easy as it would be, ignoring your tax debt will only make your future financial problems worse.
The best financial decision for homeowners to help get rid of tax debt would be to pay it off as quickly as possible. For homeowners, there’s a strong likelihood that your property has increased in value since you first purchased it, and the equity that your home holds may be exactly what you need to rid yourself of any existing tax debt.
The Consequences Of Ignoring Your Tax Payments
If you’ve ever been, or currently are behind on your tax payments, you have nothing to be ashamed of.
Now, more than ever, Canadians have been struggling with timely tax payments. In fact in 2018, the Canada Revenue Agency (CRA) was owed a record high of $352 million, collectively, from Canadians!
That being said, being behind on your personal tax payments should not be anything to boast about. You should always be striving to clear your outstanding payments for a debt free future, and failing to pay your taxes in full and on time may result in a variety of financial headaches.
For instance, the CRA is continuously on the hunt to collect your money that is owed to them. They may charge daily compounding interest on the entirety of your outstanding payment to them, which may also include a number of fitting penalties. If you put off making your payments to the CRA for too long, they also entitled to:
- Wage garnishment (legally withholding money from your paycheck)
- Withhold your GST or child tax credits
- Issue a lien (a legal right to seize) against your properties
- Freeze your investments and bank account
In short, while delaying your tax payments may seem like an easy way to offset stress, prolonging such payments can create larger problems for you in the future — and we want to make sure you’re equipped with a financial strategy to help you break free from tax debt!
Tap Into Your Home Equity To Help You Clear Your Tax Debt
If you’re unable to pay off the entirety of your outstanding debt payments, the CRA may permit you to make smaller payments over an agreed upon period of time, until your debt (including interest) is paid off.
However, not everyone is eligible for such an arrangement and qualification may depend on if you’re able to demonstrate that you have tried to repay what you owe by borrowing money. In fact, much of tax debt payments made consist of money borrowed from the lending industry. That being said, it’s important that you understand that:
- Many borrowers may fail to meet lending criteria for loans because of stringent income and credit requirements set out by banks (ex. When trying to attain a second mortgage)
- Banks are not inclined to administer unsecured loans to assist your tax payments
But if you’re a homeowner in need of financial assistance, there’s one must-know tip that you need to help you get rid of your outstanding tax debt:
If you’re out of luck with acquiring a second mortgage from the banks, applying for a mortgage loan from Leap Financial can help you tap into your home equity and provide you with the capital you need to break free of your tax debt!