Tax Lien Certificates
Posted in Estate Lien Tax Credit Tax Lien Tax Sale

Tax Lien Certificates

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.