Government Tax Lien Certificates: An Overview
Tax lien certificates are being offered in many states and counties in the U.S. So now you must be wondering what this is all about. To know about government tax lien certificates, you should know what a tax lien is.
A tax lien is a lien imposed on the property by law for securing payment of taxes. The tax liens may be imposed for delinquent taxes owed on real estate or personal property. LetÂ’s discuss how this works.
The owner of any property whether residential or commercial is required to pay some property taxes to the applicable local and state governments. This depends upon the value of that property and also the country in which the property is situated. Such type of taxes is also known as real estate taxes.
However, it has been a frequent occurrence that some people are not able to pay off the taxes to the government. Therefore, they become delinquent. After the establishment of the delinquency, the appropriate governing authority is in charge of collecting the property taxes. This is done through tax deed sale or tax deed auctions.
There are various states in the U.S., and all of them have a different set of rules and laws regarding the actions and collections of the delinquent taxes. For collecting such type of fees, usually, the local county government is responsible as the accumulated amount of tax is being utilized for improving the condition of the local communities.
There are two types of government tax sales used in the U.S. These are tax deed sales and tax lien certificates. For delinquent tax property, the local governments usually hold out the tax auction known as tax deed sale. The total sum of taxes is the minimum bid including any administrative charges and interest on the amount owed.
The person who offers the highest deed is being offered awarded the act of the property. However, you should remember that he set of rules and regulations regarding the possession and the time lapse required before assigning the absolute deed is different among the different states.
In case you have any tax question or you want more information about tax lien certificates and tax foreclosures, then you may take the consultation of a professional to guide you in the same. Tax lien certificates are also auctioned and valued at the tax owed and administrative charges and interests. However, there is a difference. In tax lien certificates, transfer of the property deed at the time of auction is not present.
Once the selling out of the tax lien certificates is through, the delinquent taxpayer has to pay back lien amount and the interest charges. These interest charges may be around 16-18% and are given to the owner of the property.
With these details on government tax lien certificates, you are now armed with the basic facts so go ahead with confidence.