Tax Liens and Tax Lien Certificates

In the US you are required to pay taxes on your property as well as your income.  If you fail to pay these taxes the government can step in and put what is called a tax lien on that property or income.  This basically means that the government has put a hold on your property in order to obtain the back taxes owed.

Say for example that you own a house and have allowed your taxes to become delinquent.  The government will then put a hold on that property (house) which gives them the right to then either set up a payment plan with you or move on to a levy.  The levy would then allow the government to seize the property and sell it in order to obtain the taxes owed.

Once a government tax lien has been placed on your home you can then choose to abide by the payment plan or sell the home.  If you sell the home and the sale amount is not enough to pay off the back taxes you have additional options.  You may sign a release of the lien which will then make the taxes owed the responsibility of the new owner.  Another possibility if the sale does not cover the tax lien could be that the government puts a lien on other property you own and/or begins a wage garnishment which allows money to be taken from your paycheck until the debt is repaid.

If you are facing a government tax lien it would be wise to contact a lawyer and try to work things out with the government before that lien turns into a levy.

The economic crisis has forced many homeowners to fall behind on their taxes.  Although these are horribly tough times for the homeowners, they are very lucrative times for investors!  Tax lien investing is an extremely profitable way to beat the economic downturn at its own game.

When a homeowner becomes delinquent in their property taxes the government steps in and places a tax lien on the property.  Often times this will cause the homeowner to sell the property/home or have it end up in foreclosure in order to pay off the lien.

This opens an opportunity for those of you that want to make money.  You can literally become a tax lien investor wherein you purchase the lien and earn a healthy profit.

Here are 2 of the many ways to generate a profit from tax lien investing:

The Redemption period is the first way. Once the tax lien in purchased by an investor the homeowner is given a specific time period in order to pay their delinquent taxes. If the homeowner pays the debt, the lien holder (you) receive your investment back as well as penalty fees and interest.

The second way to generate a profit could be even more lucrative. If the homeowner is not able to pay the delinquent taxes within the set time period, the investor (you) can file a lawsuit to obtain the title to the property.

There are other ways to gain a healthy return from tax lien investing.  You should be well versed in the topic before attempting it however.   There are programs available that can walk you through the process and show you how to proceed every step of the way.

One such program is the Tax Lien University.  This particular program will show you everything you need to know about tax lien certificates, tax deeds and everything in between.

As mentioned there are numerous legitimate sources available that can help you become educated and quickly become an expert on the subject.

You do not have to be a victim of the economic crisis when there are options available to help you thrive during these hard times.  The key is to do your research, and understand the process thoroughly before investing a dime.  As with anything else, the more you know the more you can make.  Tax lien investing is but one way to generate income during trying times, and you should know that it exists.

When someone owns a home and becomes delinquent on their taxes the government will place a tax lien on the property.  These tax liens can then be auctioned to the highest bidder by the government.  This allows the government to get paid and private investors to then receive the money owed from the homeowner including penalties and interest.  It can be quite lucrative for an investor.

There are variables involved that include the fact that all tax liens are auctioned under an “As Is” condition.  This means you do not get the opportunity to inspect the property before buying the debt.  The home may be in great shape, but it may not and this is the risk you take.  It is a risk because once you own the tax lien; the homeowner may still not pay the debt which would leave you in a position to sue for the deed.  If the home is in serious disrepair it may be difficult to sell at a profit.

Best case scenario is that you win the auction and buy the tax lien and then the homeowner pays you in the specific time period allowed.  In this case you get the total amount owed in addition to penalties and interest which can add up to a large profit.

The tough economy can work to your benefit if you are interested in investing in tax liens and attending (in person or online) tax lien auctions.  Each state has specific rules and guidelines that must be followed. Be sure to check with your state before entering into a tax lien auction.