2025 Supreme Court Decision: Government Cannot Profit from Tax-Foreclosed Homes – Key Ruling Explained
The Supreme Court has ruled that local governments can no longer keep profits from selling homes seized due to unpaid taxes, protecting homeowners from excessive financial loss.
Diccon Hyatt, a seasoned financial and economics journalist, has extensively covered economic developments during the pandemic, translating complex financial topics into clear insights that highlight their impact on personal finances and markets. His work includes contributions to U.S. 1, Community News Service, and the Middletown Transcript.
On Thursday, the Supreme Court issued a unanimous ruling that local governments cannot retain profits from auctioning properties seized over unpaid taxes. This landmark decision protects homeowners from losing more than what they owe in taxes.
The case involved Geraldine Tyler, a 94-year-old Minneapolis resident whose condo was foreclosed by Hennepin County in 2015 due to $2,300 in unpaid property taxes plus $12,700 in penalties and interest. The county auctioned her property for $40,000 and kept the surplus amount, a practice previously allowed in 12 states and Washington, D.C.
The Court found this practice unconstitutional, citing the Fifth Amendment’s Takings Clause, which safeguards property rights. Chief Justice John Roberts emphasized that governments cannot take more from taxpayers than what is owed, a principle tracing back to English law and the Magna Carta.
This ruling ensures fairness in tax foreclosure proceedings and prevents governments from profiting at the expense of homeowners.
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