When you owe taxes to a bank and you do not pay those taxes, the lender will have the power to execute lien, customarily known as tax lien . Banks use tax lien to settle money issues with the borrower. Government can also attach lien to properties that have delinquent property tax against them. State examines it as a technique to recover money at the time the governing body wants it. The govt. will sell tax lien certificates at tax lien auctions to the speculators. The winning bidders at these tax lien auctions will be receive high rate of interest against their investments. The governing body will recover the property tax at some specific point. This is when financier receives the cash back with gigantic profits. The profits result due to high rate of interest and penalties that tax defaulter has to pay in order to redeem the property. If tax defaulter fails, the government can decide to put the property in foreclosure state. The tax lien owner will recover investment with interest after foreclosure sale.
This appears a great way to make money even if the property goes on sale. The tax lien owner will turn into a creditor when property goes up for foreclosure. However , you ought to know few things before you invest in this market.
You need to concentrate on commercial properties since the owner will always redeem those properties. The IRs and penalties will be higher, leading to higher profits.
Always look for tax lien auctions with low competition. This is going to help you to win bids without having to go for a bid you never wanted for certain property.
You should generally check the title of the property before you bid for its tax lien in a tax lien auctions. Researching the title will enable you to grasp the true worth of that property.
About the Author:
Greg Dickson is the boss of selling for the Wealth Matters, one the leaders when it comes to taking advantage from tax lien auctions. You will get the best guidance concerning how to invest in tax lien and handle foreclosure investing.
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