Tax liens can be complex and vary in form depending on the circumstances but generally speaking the term relates to a government claim against assets based on failure to pay a tax debt on time and this may occur on either a state or federal level.
Whilst it’s always wise to seek professional investment advice from reputable names like tedthomas.com, each year many more of us are seeking to invest and make a profit from tax liens; that’s why we’ve put together these helpful tips to get you started.
- Before you start you will need to contact the local county registrar’s or tax recorder’s office and request a listing of tax liens in the county as well as information regarding tax lien auctions. Most counties can access these records easily and it won’t cost you a lot to get hold of the list.
- Next you will want to select a property that you wish to pay the lien on. Before you commit always ensure that you confirm the interest rate that the county will pay you for paying the owed tax and this can vary drastically from as much as 25% for the first 6 months in Texas to more modest amounts on the East Coast. Make sure you purchase the lien in cash at the recorder’s office
- Ensure that you obtain the tax lien certificate with the expiration date and that you get a receipt for the sale. Keep these records safe until either the lien is set to expire or the homeowner pays you and the interest owed. Again, it’s wise to collect payments at the tax recorder’s office.
4.If the property owner has not paid the lien plus interest and it expires then it’s time to seize the real estate. At this point the property is legally yours and you can start the eviction process but you may want to call in the help of the local police.
- Always keep a look out for tax lien auctions in states that have them. Some states across the country hold quarterly or annual auctions while others hold them more regularly and they are usually organised by the country sheriff or tax office. Just keep in mind that most auctions require a minimum deposit to register and will insist on payment of at least ten percent of the final bid price at the close.
- Finally it’s a good idea to renovate your newly owned property and then you can sell it on for profit or rent them for income.