Tax Lien Properties

An Introduction To Tax Lien Properties

All of us know that the state machinery needs taxes to function correctly. If people fail to pay taxes, the state has a right to impose measures which allow it to collect its dues. Status of tax lien properties is one such measure which is applicable in case people fail to pay their taxes. The condition can be imposed for nonpayment of Federal taxes and in some cases, state or even county taxes.

In case of federal taxes like federal income tax, the tax lien properties are earmarked by the IRS. If the state or county tax like property tax is not paid, it is in the authority of respective government to mark out the tax lien properties.

The very basic thing about tax line properties is that the financial mobility of these properties gets severely restricted. Tax lien properties cannot be mortgaged for any purpose. Ironically they can not even be mortgaged to raise funds to repay taxes. This is in stark contrast to the fact that if the tax lien properties are already under a mortgage, the mortgage holder compensates the tax amount to ensure that his collateral is not gone if and when he has to liquidate it

Apart from the income tax and property tax, tax lien properties can be earmarked for nonpayment of some utility charges like sewer or water charges, vacant lot clean-up charges, money due for repair of the side walk, etc. Any penalties and surcharges on these dues, if left unpaid, can also attract the status of a tax lien property.

If a person feels that his property has been slapped with an incorrect tax lien, he can move into the appropriate federal or state court. If the tax lien is found to be false, it is lifted. In case the tax lien is found to be valid, the taxpayer is given a period by the end of which he is supposed to clear all his dues. In case the taxpayer can make all his contributions in the stipulated period, he gets back control over his property.

In those cases, where the taxpayer does not clear his dues in the stipulated period, his tax lien properties are put out for an auction. If a taxpayer is a subject of tax lien properties, he should not lose hope. Even though the property has been put up for sale, it might not be sold.

Even if it does get sold as a tax sales property, the ownership does not pass to the new buyer immediately. He gets a tax lien certificate. The owner still gets some time to pay the total bid amount and reclaim the property.

Tax lien certificates, especially the Florida tax lien certificate is an excellent investment opportunity if you are a real estate investor.

For those who are worried about their tax lien properties, there are some organizations which can provide tax lien help in the form of legal aid and financial assistance. Just search the internet or ask a tax consultant.

Author: James Taylor

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