Tax Lien Certificates

Tax lien certificate investing is something that all investors in real property ought to consider. There are lots of benefits to buying tax liens, however there are some dangers that it’s good to bear in mind. States use either or both a “tax deed” system or a “tax lien” system. Most states in the USA and provinces in Canada have a system for gathering unpaid real estate property taxes. If a house owner or commercial real estate proprietor fails to pay property taxes, the county will issue a tax lien or tax deed on that property. The local authorities could then sell a tax certificate at public sale to acquire the necessary overdue tax revenue. Other states have what are called tax deeds where the taxing authority sells the property to recoup the late taxes.

There are so many great opportunities to invest and make money right now. When the economy is not so great and the markets are down, when everyone else is selling, that is usually when the smart investors are buying. But how do you know what to buy when? If you purchase stocks when the stock market is down, you don’t know if the market will go lower before it turns around and you don’t know for how long it will remain down before it goes back up. It’s the same with real estate or any other market.

One of the nice things about investing in tax liens though, is that they are not tied to any market. The rate that you receive on your tax certificate is fixed, so even though the value of the real estate that secures your lien may fluctuate, the interest that you get when your lien redeems remains constant. The county or municipality that issues the lien, not by the price of the property that the lien is against, determines the interest rate.

Tax lien certificates are given out to tax payers who are late on paying their taxes. For the most part tax lien certificates have to do with delinquent property taxes. The face value of the lien is the amount of money owed to the government as well as any management costs associated with creating the lien. This increases the prices and brings in extra profit to the government. While other auctions, liens are sold at face value. Once you have purchased a tax lien certificate you are required to pay the back taxes. In return, the home owner is now in debt to you. Once the lien is sold the home owner is required to pay the lien holder the back taxes, administrative fees, and any interest which has accumulated on the debt.

When you make investment in tax lien certificates, you must not worry on anything and must sit back and count the benefits. Others people will do all the necessary work for you! Like you may not need to do enforcement of the purchased lien till the foreclosure as county will do the same for you. In many states the process of foreclosure is also handled by the county.

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