What Everyone Needs To Know About Estate Lien
The government has a lot of important tasks to accomplish, but as with everyone else, the government needs money to do it. This is why the government has to levy taxes form its citizens. Most of the people pay taxes happily, but some people try to avoid taxes. This is the reason that estate lien has been introduced in different states. It is somewhat like an embargo which restricts the value of any estate. The estate lien can be imposed by state and county government and even IRS in some cases.
Estate lien is imposed on land or building. The most common case where estate lien is imposed is the failure of the taxpayer to pay his property tax. In this case, an estate lien is imposed on the property. Imposition of the estate lien means that capital can neither be sold off nor can it mortgaged, not even to muster the funds to pay taxes which are due. This means that if you get an estate lien, it is time to do some serious thinking.
The very first thing that you have to do is check your tax records. If you find even a slight fallacy in your tax records, you should immediately bring it to the notice of tax collector of your area. There are some tribunals to sort out such matters.
You can try to coax the tax collector to allow you to take benefit of any future tax dues settlement schemes. These schemes allow you to pay your tax in easy installments. In some cases, Uncle Sam gets extra conciliatory and even waives off your penalties so you can spend the original tax amount and get rid of your estate lien.
Let us take the worst case scenario now. If you are not able to pay your taxes. The positions come into the picture. Your federal tax lien records are tallied, and then the estate is put up for lien sales. All hope is not lost yet. The person who buys the tax lien certificate at the lien sales can not start estate foreclosures proceeding immediately. You still get a redemption period to pay the tax and penalties. If you can pay back everything now, you get to keep the property.
Estate lien has turned out to be one of the most effective tax recovery measures ever since its introduction.
An Introduction To Tax Lien Certificates
One of the investment schemes run in the United States that is yet to gain popularity is the sale of tax lien certificates. These certificates are a great investment vehicle for small-time investors who want the money to be safe and also want to make some extra benefit while they are at it. They can quickly get a property which is much more valuable than what they have spent.
The law of United States provides that government has a right to seize property if the owner fails to pay his taxes in the given period. This is made to ensure that people do not avoid their tax liability and the state machinery can continue to function smoothly. It provides a constant supply of tax money. The state and county governments have this right to impose liens on property tax delinquent. Even IRS can impose a claim in some cases.
The time within which the seizure takes place varies. In some cases, even the first year of a lapse in tax payments is enough for alien to arise. Some other states or counties may allow much more extended periods before the tax lien arises. In any case, once the tax lien arises, the tax defaulter is given notice. If he can clear his dues in allocated time, the claim is removed. If the payments are not made, tax lien certificates are put up for auction.
In layman’s terms, the tax lien certificate can be considered a document which transforms the tax liability of taxpayer into that of a loan taken from any other individual. The person who purchases tax lien certificates makes payments and clears all the tax liability. The actual owner of the property is given a tax certificate redemption period.
During this period, the actual owner of the property is free to clear the consolidated liabilities that have been accrued by interests and penalties as well as the premium paid by the person who purchased property tax certificates. If he can pay these amounts, the tax lien certificates are considered to be redeemed.
In other cases where the actual owner of the property fails to get the tax lien certificates redeemed, the person who purchased the documents can move to the court of law and ask for estate foreclosure orders. Some states even allow the assignment of tax lien certificates if the original purchaser wants to walk out early.
You can attend any particular real estate seminar if you want more information about tax lien certificates as a form of real estate investments.