Real Estate Notes | Tax Lien Certificate Investing – 16 percent return on your money or more

Most people consider taxes as a burden and hate the idea that almost everything they own is subject to taxes. However, in certain cases taxes can lead you towards an unprecedented opportunity resulting in very high profits. Most people might not take this statement seriously but there is substantial proof of a brand-new industry that has taken shape in the last decade that thrives on earning profits through taxes. This industry is centered on the taxes of people who have not paid their property taxes.

Thousands of people do not pay taxes that are levied on them under state and federal law on any kind of property they own. This could be residential as well as commercial. Residential property can be defined as a house or an apartment where you currently reside or have given someone to rent. Commercial land is your office space or retail shop, if you have any. However, regardless of the type of property you own, failing to pay the property taxes qualifies your land to be put up for sale through an auction. Forcing the sale of your land is known as a tax lien. However, in reality, it is a little more complex than simply selling your home to the highest bidder.

The auction allows anyone to bid for the property, taking into context the interest and premium house rate, as well as the tax amount that has not been paid.  In many States, the process is simple. When the owner of a property is unable to pay the taxes that are due by a specific date, the local authority in that area has the right to issue a tax lien on the property. This tax lien is then eligible to be sold in an auction to the highest bidder and once sold it will be considered a tax lien certificate. The major advantage of a tax lien is that you might not be able to get a nice piece of land at a price that is much lower than the market rate. However, the original owner has a redemption period, in which he or she can repay all taxes that have accumulated on their property and retain the land.

These payments, however, are not made to the state but rather to the Tax Lien Certificate Buyer, since the certificate holder has already paid the state during the auction. The payment that the Tax Lien Certificate Holder receives is usually much higher than what he paid in the auction, thus resulting in a reasonable profit. On the other hand, if the original property owner is not able to make the payments, then the property is simply transferred to the tax lien investor. Tax liens and tax lien investing have become very popular in the United States. These tax lien certificates are government issued; therefore, the tax lien certificate risk of default should be low. Investing in a tax lien seems like a great opportunity but in reality it requires a lot of research and hard work in order to earn a reasonable profit.

If you have received a tax lien from the IRS, this link may be of help to you: http://www.irs.gov/businesses/small/article/0,,id=108339,00.html

If you are looking to purchase tax liens, here is an example of a government locality that lists their auction dates http://www.co.cattaraugus.ny.us/treasurers-office/events