Memphis Property Tax Delinquency: How to Avoid Tax Sale (2026)

If you've fallen behind on Memphis property taxes, you're not alone. Thousands of Shelby County homeowners owe delinquent taxes—and the penalties compound quickly. At 18% annual interest, a $3,000 tax bill becomes $3,540 after one year, and continues growing.

This guide explains your options: payment plans, tax relief programs, selling before tax sale, and what happens if you do nothing. The key is acting before Shelby County sells your property to a tax lien investor.

How Memphis Property Tax Sales Work

When property taxes go unpaid in Shelby County, a specific process unfolds that can eventually result in you losing your home. Understanding this process helps you know how much time you have and when to act.

The Tax Sale Process

1. Taxes become delinquent: Memphis/Shelby County property taxes are due by February 28. After that date, they're delinquent.
2. Interest accrues: 1.5% monthly interest (18% annually) begins accumulating immediately.
3. Notices sent: Shelby County Trustee sends delinquent tax notices, typically starting in April.
4. Tax sale listing: Properties delinquent for 1+ years are listed for tax sale.
5. Publication: Properties are advertised in local newspapers 3-4 weeks before sale.
6. Tax sale: Held annually, typically April-May. Tax lien certificates sold to investors.
7. Redemption period: You have 1 year to redeem (pay off) the lien plus interest.
8. Foreclosure: If not redeemed, the tax lien holder can foreclose and take ownership.

What Tax Lien Investors Pay

At Shelby County tax sales, investors bid on tax liens. They pay:

• The delinquent tax amount
• All penalties and interest
• Court costs and fees

In return, they receive a lien on your property that earns interest. If you don't redeem, they can eventually own your home for pennies on the dollar.

Timeline: From Delinquent to Tax Sale

Example: $3,000 Tax Bill

Here's how a $3,000 delinquent tax bill grows over time:

• Day 1 (March 1): $3,000 owed
• After 6 months: $3,270 (9% interest)
• After 12 months: $3,540 (18% interest)
• After 18 months (tax sale): $3,810 + fees (~$4,200 total)
• To redeem after tax sale: $4,200 + additional interest to lien holder

Your Options to Resolve Delinquent Taxes

You have several paths forward, depending on your financial situation and goals:

Option 1: Pay in Full

The simplest solution if you have funds available. Contact Shelby County Trustee for your exact payoff amount including all penalties.

Shelby County Trustee
Address: 150 Washington Ave, Memphis, TN 38103
Phone: (901) 222-0200
Website: shelbycountytrustee.com

Option 2: Payment Plan

Shelby County offers payment plans for delinquent taxes. You can spread payments over time while stopping tax sale proceedings. See the Payment Plans section below.

Option 3: Sell Your Property

If you can't afford to catch up, selling preserves your equity. Back taxes are paid from sale proceeds at closing.

Example:

• Home value: $120,000
• Mortgage balance: $60,000
• Delinquent taxes: $8,000
• Cash sale at 75%: $90,000
• Your proceeds: $90,000 - $60,000 - $8,000 = $22,000

Compare this to losing the property at tax sale and getting $0.

Option 4: Apply for Tax Relief

Some homeowners qualify for property tax relief programs that can reduce or freeze your tax burden. See Tax Relief Programs below.

Option 5: Redeem After Tax Sale

If your property has already been sold at tax sale, you have 1 year to redeem by paying off the lien plus interest. This is expensive but preserves ownership.

Shelby County Payment Plans

If you want to keep your property but can't pay delinquent taxes in full, Shelby County offers payment plans:

How Payment Plans Work

• Eligibility: Generally available to any property owner with delinquent taxes
• Terms: Typically 12-24 months to pay off balance
• Down payment: Usually 25% of total owed upfront
• Interest: Continues accruing on unpaid balance
• Protection: Property removed from tax sale list while in compliance

Requirements

• Apply in person at the Shelby County Trustee's office
• Bring photo ID and proof of property ownership
• Make required down payment at signing
• Stay current on monthly payments
• Keep current year's taxes paid on time

What Happens If You Miss Payments

Missing a payment typically terminates the agreement. You'll owe the remaining balance immediately, and the property can be added back to the tax sale list.

Selling to Pay Off Back Taxes

For many Memphis homeowners with delinquent taxes, selling is the smartest financial decision. Here's why and how it works:

Why Selling Often Makes Sense

• Preserve equity: Tax sale can wipe out all your equity for just the tax debt
• Stop the bleeding: Penalties and interest stop accruing once you sell
• No upfront payment: Taxes paid from proceeds at closing, not out of pocket
• Fresh start: Eliminate the stress and financial burden

How It Works

1. Get offers from cash buyers (takes 24-48 hours)
2. Accept an offer that works for you
3. Title company orders tax payoff from Shelby County
4. At closing, back taxes are paid first from proceeds
5. You receive remaining funds

Example: Selling vs. Tax Sale

Property Details:

• Market value: $150,000
• Mortgage: $80,000
• Delinquent taxes: $12,000

If You Sell (70% cash offer):

• Sale price: $105,000
• Pay mortgage: -$80,000
• Pay taxes: -$12,000
• You receive: $13,000

If Property Goes to Tax Sale:

• Investor pays: ~$12,000 (taxes + fees)
• You receive: $0
• You still owe mortgage: $80,000 (deficiency possible)

Selling protects $13,000 in equity that you'd otherwise lose entirely.

Can I Sell If Already Listed for Tax Sale?

Yes, up until the moment the property is actually sold at tax sale. Cash buyers regularly close on properties that are days away from tax sale. The key is acting quickly.

Redemption Rights After Tax Sale

If your property has already been sold at Shelby County tax sale, you still have one more chance: the redemption period.

How Redemption Works

• Timeline: 1 year from tax sale date
• What you pay: Amount paid by investor + interest (typically 10-12%/year) + fees
• Result: You keep ownership; lien is cancelled

Calculating Redemption Cost

Example:

• Investor paid at tax sale: $8,500
• Interest at 10% for 8 months: $567
• Additional fees: ~$200
• Redemption cost: ~$9,267

If You Don't Redeem

After the 1-year redemption period expires, the tax lien holder can file for a court order to foreclose. Once foreclosure completes, they own your property free and clear—regardless of your equity.

Should You Redeem or Sell?

Calculate both options:

• Redeem if: You can afford the redemption amount AND want to stay in the home
• Sell if: You can't afford redemption OR don't want to keep the property

You can sell a property during the redemption period. A cash buyer can pay off the lien holder as part of closing.

Memphis/Shelby County Tax Relief Programs

Some homeowners qualify for programs that reduce property tax burden:

Tennessee Tax Relief for Elderly/Disabled

State program that reimburses part of property taxes for qualifying homeowners:

• Age requirement: 65+ OR disabled OR disabled veteran
• Income limit: Varies by year; typically ~$30,000-$35,000
• Benefit: Reimbursement of taxes on first $29,000 of home value
• Apply: Shelby County Trustee's office

Tennessee Property Tax Freeze

Freezes property taxes at current level for qualifying seniors:

• Age requirement: 65+
• Income limit: ~$45,000 (varies by year)
• Benefit: Tax amount frozen; won't increase with assessments
• Apply: Shelby County Assessor's office

Disabled Veteran Tax Exemption

Tennessee provides property tax exemptions for disabled veterans:

• 100% disability: Full exemption on primary residence
• Partial disability: Prorated exemption
• Apply: Shelby County Assessor with VA documentation

Frequently Asked Questions

When does Shelby County hold tax sales?

Typically in spring (April-May) for properties delinquent more than one year. The exact date varies annually. Check the Shelby County Trustee website or call (901) 222-0200 for current year dates.

Can I sell my house if I owe back taxes?

Yes. Back taxes are paid from sale proceeds at closing. Many cash buyers specifically work with tax-delinquent properties and can close quickly.

How much are property tax penalties in Shelby County?

1.5% interest per month (18% annually) on delinquent taxes. Additional collection fees and court costs apply if the property goes to tax sale.

What if I can't afford to pay my back taxes?

You have options: set up a payment plan with Shelby County, apply for tax relief if you qualify, or sell the property to preserve your equity before tax sale.

Can I stop a tax sale?

Yes, by paying the full delinquent amount before the sale date. You can also set up a payment plan, which removes your property from the sale list. Selling the property before the sale date also resolves the issue.

What happens to my mortgage if the house goes to tax sale?

Tax liens take priority over mortgages. If a tax lien investor forecloses after the redemption period, your mortgage lender may lose their collateral. However, you may still owe the mortgage balance as a deficiency.

Do I get any money if my house sells at tax sale?

No. Tax sales only sell the tax lien, not the property equity. All excess value goes to the lien purchaser if they eventually foreclose. This is why selling before tax sale is critical to preserve your equity.

Can I buy my own property at the tax sale?

Generally no. Shelby County prohibits property owners from bidding on their own property's tax lien.