Local governments (county, city, township, town, parish) receive most of their operating funds from property taxes. When property owners default and fail to pay property taxes the local government’s method to enforce payment of those taxes is to place a tax lien on the property or seize the property and sell it for the back taxes which are due. If the property taxes remain unpaid the government in about half the states in the United States sell tax lien certificates and the others sell tax deeds at a tax defaulted auction. There are two basic systems used in the United States for local governments to recover unpaid taxes at a delinquent tax sale:
Delinquent tax deed sales are most often held at a public auction, where anyone can buy, including foreign investors. Those who invest in tax lien certificates are often seeking a passive high interest return on their investment, while those, who invest in tax deeds are willing to buy and sell property and earn a much greater return on their investment at a delinquent tax deed sale auction.
Ted Thomas has helped many investors understand the answer to: “What is a tax defaulted property auction/delinquent tax deed sale auction like?” and the secrets to avoid costly mistakes. In the video linked below Ted introduces a young Canadian investor, who discusses how to pick between tax lien certificates and tax deeds.
Here is the info on tax sales from wikipedia
Be sure and check out our list of Tax Deed States if you are further interested in finding your first auction.
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