Helpful Notes on Tax Lien Certificates

Helpful Notes on Tax Lien CertificatesWhen investing for tax lien certificates, do not forget that some counties and jurisdictions in the United States require large deposits from investors at the start of the auction. It is regardless of the tax lien certificate amount that you are looking to purchase. Moreover, payments of these liens are usually in cash and due on the spot. Failure to pay the full amount can potentially result in barring you from future tax lien sales.

Do take note that lien certificates are almost worthless, until the designated time frame provided for the original property owner to pay up his tax debt. Furthermore, lien certificates cannot be traded for cash. So, keep it or until the fees are settled by the property owner.

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Tax Lien Certificates Investment and Risk

Tax Lien CertificatesTax lien certificates as a superb investment strategy for young and old alike, have seen a rise in popularity over the years. Many see the potential in it because of how to easily to acquire one. Plus, the opportunities of getting high returns which is very attractive.

However, you need to know that there are always risks involved in this type of investment. But the negative effects of these risks can be avoided by doing your research. It also pays to be smart in your decisions when it comes to choosing the tax lien properties included in the auction. Learn as much as you can and get information available no matter how small it is. Study thoroughly the properties you want to bid. Take note that some investors bid blind. They often end up with properties worth nowhere near the money they bid on it. So, take advantage on this situation too.

Opportunity and Profit from Tax Lien Investing

opportunityprofitTax lien investing is an amazing opportunity for real estate investors in the United States. The chance to acquire a property for far less than its market value is a very attractive investment for new and old investors. This guarantees you of getting higher profits.

It is important to be ready when attending your first tax lien sale as an investor. It is because whatever amount you’re willing to bid on a tax delinquent property, make sure that it is really worth the time, effort, and money. So, research ahead of time and create plans before, during, and after the sale. Also, make an investment strategy.

Tax Lien Property Foreclosure

Tax LienForeclosure of a tax lien property is never a good experience to deal with. It is crucial to be aware of where you stand once your property has been foreclosed by the government or lender. And once the proceedings are put in place, you are going to have a limited time catching up on your mortgage payments.

Do this prior to the lender accelerating the payments, and to the point where they would accept nothing less than full payment for the property. If you intend to keep the property, the allotted time provided for this would vary depending on the loan provider. It would usually be no more than a couple of months.

Act on Tax Notices Right Away

Tax Lien Auctions

When the Internal Revenue Service or IRS sends you a notice on tax delinquency, whether on income or property, the first thing to do is to never ignore it. A notice sent by the IRS provide additional time and opportunity for you to respond, and save yourself from bankruptcy or losing property to tax lien auctions. The next thing to do is seek help from a licensed tax professional who knows how to handle and give advice to your dilemma. Tax professionals have the knowledge, deep understanding, and proficiency on how to apply the rules that govern different compliance issues, as well as tax debt scenarios to deal with.

You also need to review the tax returns from which your liability was obtained. Even the slightest mistakes such as declaring income or deductions twice can increase your tax liability. However, this can be fixed by filing an amendment. It is best to consult these things with your tax professional.

Are All Tax Liens The Same?

Tax Lien AuctionsThe answer is no. It is because liens vary in priority and types. Priority is very important. A good example of this is a first lien mortgage on a property. Moreover, a lender who is holding a senior lien in the form of a mortgage on a property has the right to repayment of its debt, before any junior lien holder.

The repayment is typically acquired through the proceeds of a mortgage foreclosure sale or tax lien auctions. In case you don’t know, foreclosure relinquishes all interests in the property that are junior to that mortgage. This is why first lien mortgage on a real estate is crucial.

Types of Common Liens

Tax Lien CertificatesUtility Lien
It is a lien filed on a property by the utility service or county for failure on the part of the homeowner to pay bills such as electricity or water.

Property Lien
When a homeowner fails to pay real estate taxes, then the county places a lien on the property. Then, the county puts up tax lien certificates in an auction and whoever wins the bidding gets the lien certificate.

Divorce Lien
A divorce lien is filed on a property as a result of an official order issued by a legal authority such as the court.

Mechanic’s Lien
It is the type of lien that is statutory and secures payment for labor, material, and services
related to improvements made on a property.

Judgment Lien
It is a type of lien created when a lawsuit is won against a defendant of a criminal case. Then, it is attached to the property in order to be received as payment after it is sold.

What is a Lien and Property Foreclosure?

Tax Lien AuctionsA lien is a notice attached to your property which informs the public in attention that a creditor has claim. Liens are filed and recorded in the county office or with the state secretary.

Just to make it clear, a lien existing on your property has a bad effect on the title, which prevents you from selling it. You must pay off the lien in order to avoid foreclosure and clear the title of the property. Then, have a release filed in the county office records which puts the general public in attention of the debt discharge. However, if you fail to pay up, you’ll potentially lose your property to tax lien auctions. The tax lien certificate holder to your house can choose to foreclose the property and get his return of investment.

Florida Tax Lien Investing Pros and Cons

Tax Lien InvestingInterested in Florida tax sales? Tax lien investing in Florida yield pros and cons for would be investors. As long as you bid on properties that fit the bill, and do due diligence, there’s no need to worry about acquiring the property, if you’re only after the return of investment.

Be confident that your lien would be paid when someone bids on the property at the sale. However, you need to pay an application fee and redeem any outstanding liens as well as pay subsequent taxes, which vary from county to county. The good thing though is that everything you pay from this point forward would earn 18% interest until the property is sold or redeemed.

Tax Lien Investing Agent to the Rescue

agenttaxIs it possible to buy tax lien without the necessary due diligence and going to the sale yourself?  There are ways actually, and one of these is by acquiring the services of a tax lien investing agent.  The agent can do all the work of purchasing tax liens and managing your portfolio.

The agent can take care all of the tedious tasks for you.  Making the list of tax lien properties, researching, bidding at the sale, managing your portfolio, and taking care of any redemption or foreclosures, he can accomplish these things for you.  You would just sit back and collect the profit afterwards.