Tax Lien

Your First Introduction To Tax Lien

Every time people hear the word ‘Tax,’ their heartbeat accelerates nineteen to the dozen. But not all the topics related to taxation might be so troublesome. The tax lien is just one of those topics which you need not worry about if you pay all your taxes within the due date. Instead, the tax lien can become an excellent opportunity for investment. If you are not slapped a tax lien in your face by the IRS or state government, there is nothing to worry.

Real estate investor is allowed to buy government tax liens as a form of investment. Tax liens are claims that may be laid by state or federal government on the property of those people who have failed to file their taxes. Generally, it is the unpaid income tax or property taxes like Virginia beach real estate tax which become subject to a tax lien, so IRS and state or county government has a significant role in the imposition of the tax lien on people.

In all the 50 states of US, the government has set a real property tax. You must keep in mind that even though the law is different in all the nations, liens can be imposed and in some cases, the claims can be sold by the government in the form of a tax lien certificate. These certificates are considered a valid investment measure. Generally, the tax lien certificate is sold by an auction and investor needs to develop real estate investing strategies to ensure decent returns.

The tax lien certificate if successfully purchased under the auction can lead to either of the two things. Either the person who won the tax lien certificate bid gets all the dues that the taxpayer pays when he settles his account. In another case where the taxpayer fails to pay his dues, the ownership of his property gets transferred to the successful bidder after a set period.

On the other hand, whenever tax lien is slapped on a property, the taxpayerÂ’s rights become restricted. He cannot mortgage the property in most cases to procure a loan. In cases where the property is already under a mortgage, the picture becomes different. Here the person or institution where the lien property is mortgaged generally pays the tax lien. Keep in mind that this is only because they do not want to lose their own money.

Remember that the first lender wants to ensure that you do not lose your money and get in trouble. This is the main reason to get an escrow account. Thanks to the escrow account, you need not bother about repayment of the tax lien money in one go. Slightly the repayment gets spread over a more extended period. All you have to bear is a slight increase in the monthly payment towards your loan.

Remember that the loan may always not be on your residential property and in case your property is not under a mortgage either, you have to look for certain nonprofit organizations which provide tax payment assistance. These tax lien help organizations can easily found and contacted online.

Author: James Taylor

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