Finance Tax Time

There are two types of government tax sales used in the United States: one is tax deed sales and another is tax lien certificates. These certificates are issued against delinquent taxpayers who have not complied to pay their property taxes. A tax lien certificate has a face value of taxes owed along with administrative fees and interest.

At times, the government auctions tax lien certificates. All 50 states of US have different laws pertaining to this subject, and sometimes you may find that the procedures differ per county. Therefore, depending where the tax lien certificate is being auctioned, it can either be sold at that face value or it can be bidded upon. Some states also allow tax lien certificates to be bid on by interest rate. In this case, the person who agrees upon the lowest rate of interest on the tax lien certificate is announced as the winning bidder.

Once the tax lien certificate is sold, the delinquent taxpayer is required to pay back the amount of the lien plus interest accrued, typically 16-18%, back to the owner of the tax lien certificate. In case the delinquent taxpayers fails to repay within the required period of time as assigned by the court or the governing authority, the tax lien certificate holder is awarded a deed to the property.

To explain this in simple words, when you purchase tax lien certificates, you are guaranteed a fixed return on your investment. Depending on the state from where you purchase the certificate, the earnings may perhaps be as high as 50%. Even if you get paid less than 50%, your investment is protected with the actual property.

With tax lien certificates, the holder must make the required payment on the property tax payment for the property owner. And in turn, the property owner would pay the holder the agreed amount of taxes and the penalties so accrued. Thus, all you have to gain is a high yield percentage of interest or the possibility of a deed to that property.

Tax Liens provides detailed information about tax liens, government tax liens, tax lien auctions, and more. Tax Liens is affiliated with Tax Attorneys In California.

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Whenever we hear the word “tax” we usually tend to think the worst, but that is not always true, especially if you’re talking about tax liens. The investors who buy tax liens stand to make a substantial profit, but things are not so good for the person served with the tax lien.

This brings us to the question, “What are tax liens?” Tax liens are government claims for unpaid taxes against a property. To put it simply, when a property owner does not pay his due against the property tax that he is liable, the government can place a lien against the property for unpaid income taxes. This can happen at the federal level or state level, depending on whether the property is in a state that collects income tax.

The concept works on a simple principle that the property taxes are secured by the real property. It means whenever there is default in payment of tax on that property, the appropriate tax governing authority has the right to place a lien on the property.

All 50 states in the U.S. set a real property tax. While the particular laws differ, some states permit the tax lien to be converted into a first lien on the property. This lien is available to be sold at auction as a tax lien certificate. If you have placed a successful bid, then you are assured of one of two things: A rate of interest and penalties as decided by the state that the delinquent taxpayer is required pay in order to release the lien, or the title to the property in case the delinquent taxpayer fails to pay up within a stipulated time set by the jurisdiction.

As a property owner your ownership rights get restrict once a tax lien is placed against the title to a property. In financial terms, you would no longer be able to use your property as collateral to procure any loan until the tax lien is paid.

Tax Liens provides detailed information about tax liens, government tax liens, tax lien auctions, and more. Tax Liens is affiliated with Tax Attorneys In California.

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There are times when a property owner is unable to pay the required property tax. At such a time they become a delinquent taxpayer and the appropriate governing authority is in charge for collecting property taxes. This collection can be achieved by a tax auction. That brings us to the question What is a Tax Lien auction? A Tax Lien auction is a court-ordered auction. Depending upon the state and the nature of sales it can be an auction for tax deed sales or tax lien certificates.

In case of an auction for the tax deed, the property is sold to satisfy the existing delinquent taxes. An auction of the tax lien certificate involves selling a certificate to claim the total sum of taxes owed and any administrative charges and interest on the amount owed.

If you purchase a tax lien certificate, you are required to make the payment against the required property taxes for the delinquent taxpayer. In turn, the delinquent taxpayer is required to pay back the amount of the lien plus interest charges, usually 16-18%, to you. This allows you to have two options a higher percentage of interest in case the repayment is made, or the possibility of the deed of the concerned property if the delinquent taxpayer fail to repay.

A court-appointed referee carries out the auction. At the beginning of the auction, the referee announce the terms of the sale, the required deposit to be made at the auction. Usually, you are required to pay 10% in form of a certified check which are payable to the referee.

Remember, the properties sold in these auctions are sold “AS IS, WHERE IS, WITH ALL FAULTS.” Even if a property is under a tax lien foreclosure, you do not get right to enter the property for an inspection. You are required to place your bid accounting this uncertainty. You should investigate the property as best you can, but you cannot inspect the interior prior to the sale.

Tax Liens provides detailed information about tax liens, government tax liens, tax lien auctions, and more. Tax Liens is affiliated with Tax Attorneys In California.

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