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Squatters in Detroit houses that failed to sell at a tax auction may be able to keep their homes for a mere 500 bucks.

The Detroit News reports, in a stark sign that paying property taxes is optional for some in Detroit, Wayne County Treasury officials decided last week its workers will go door-to-door to some of the 6,500 city properties unsold at last fall’s tax auctions and offer to make a deal with whoever is living inside. That could include renters, squatters or the owners who defaulted on their taxes.

If taxes had been paid on the 1,500 or so occupied units last year, that would have added $17.6 million more to Detroit’s shrinking bank account, the News estimates.

The fact that some people will be able to keep their homes for $500 after not paying taxes for three years – or just by simply squatting there, hasn’t gone over well with other taxpaying residents of Motor City.

Said one reader of MLive in Detroit expressed, “Why am I paying ever-increasing taxes on a property worth less than half of what I paid for it if paying these taxes is optional?”

The Wayne County treasurer’s office thinks this is better than allowing the number of vacant houses to grow. About 1,200 homes sold in a similar program last year.

According to the News’ report, a house that sold for $124,000 seven years ago was purchased on a land contract for $10,000 in 2010, but the new owner couldn’t pay $17,900 in taxes, fines and interest that accumulated since then.

The owner didn’t realize he could have purchased the home at the last tax auction – for a minimum bid of $500. But reportedly, others who owe back taxes have figured this out.

The News has reported more than 400 owners last fall appeared to buy back their properties for pennies on the dollar, costing the city and schools at least $4.7 million in taxes and liens.

Its sad news for Detroit, Number 2 on Forbes’ “10 most miserable U.S. cities of 2012” list, behind foreclosure stricken Miami.

Forbes reports, home prices are down 54% over the past three years, the worst decline in the U.S. The median price was $38,000 last year in the Detroit-Livonia-Dearborn metro division.

Under the latest deal, those who successfully purchase the home they now occupy will have to pay property taxes for two years to maintain ownership.

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