Introduction to Tax Lien Certificate Investing

Article Written By: tedthomas

One expense of real estate is taxes. U.S. residents bear the cost of property taxes to finance civil services such as roads, libraries, schools, police and fire departments. This policy has been in effect for over two centuries. These taxes are ordinarily assessed once a year.

But what happens if a titleholder doesn't settle the property tax bill? The solution available to county government authorities is to affix a lien on the property.

A lien is similar to a homeowner's loan, meaning that until the money due is collected, the property is not owned free and clear. A delinquent tax lien is deemed a senior lien - the government must be paid before any other debtors when the property is transferred or sold.

In order to get their money in a timely manner, the government offers tax lien certificates for sale to the community. This is normally accomplished with an auction. When tax lien certificates are purchased, the government collects their money and the property owner is hit with notification of a lien against their real estate. They are given a set amount of time to remit the delinquent bill. The buyer of the certificate then gets the lien, which is secured by the property.

In order to remove the lien, the property owner must settle the amount of the past due taxes plus any applicable interest and penalties to the holder of the certificate. When this revenue is obtained, the government authority sends a check to the certificate holder for the face amount plus any additional interest and penalties.

Sometimes the property owner just doesn't pay the taxes. That is pretty isolated, however; according to county treasurers across the country, 95 to 97 percent of all people pay the past due tax in two years or less. But once in a while, the owner never remits and this results in lots of tax lien certificate buyers every year who end up with real estate purchased for only the cost of back taxes. The tax lien certificate holder is given title to the real estate, giving them the right to keep or sell the land or housing.

You might be wondering about where you can locate tax lien certificates up for sale. Municipal governments frequently gather a list of negligent real estate owners. This record is issued to the public and can be found in one of three locations: the newspaper, online, or in print. When you get the record, you can also get the procedures and the date of the upcoming auction of tax lien certificates. Half the states in America provide tax lien certificates for sale to the general public.

Investments in tax lien certificates are conservative, secure, and sure. Each county has its own protocols, but in all instances the tax collector does the hard work for you. You do not need to remit a commission bill to a go-between, as you would when investing in stocks. Rather, you pay the government and your original investment plus interest is reimbursed by the government. You will get remunerated when the government is compensated, guaranteed.

About the Author

Ted Thomas - Visit Ted's website and receive your FREE copy of the 57-page Start Up Guide now at http://www.tedthomas.com.

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