Saturday, January 16th, 2010
Each and every owner of any kind of property is required file property taxes that is applicable to the stat and local governments. The tax will be based on the value of the property that is been owned and also in which state the property has been owned. Sometimes these taxes are referred to as the Real Estate Taxes.
Sometimes there arises some severe condition where the owner of the property will not be able to pay the property taxes that are required to be paid. When this problem arises the owners of the properties become delinquent. Once if the delinquency has been recognized, then the in charge of collecting the property taxes will be upon the appropriate governing authority. Then the appropriate governing authority will collect the tax by tax auction or through tax sales.
All states in the country have their own set of separate laws that are regarded to the course of acts in collecting the delinquent taxes. Most of the times, the local government will be put in charge in this procedure of collecting the taxes. These property taxes that are collected are basically used for the betterment of the local communities. Actually there are 2 types of Government Tax sales that are used; they are Tax Lien Certificates and Tax Deed sales
The local government that is responsible will hold an auction called as Tax Sale for the Delinquent Tax properties. Normally the general bid will be the total sum of the taxes that is owned, any administrative charges and also the interest on the amount that is owed. The bidder who will bid for more at the tax lien auction will be awarded with the deed of the property. Please note that different set of rules are being followed by different states. The rules that are followed by the states will be regarding the restrictions on the possessions and also the time lapse that is required before a person is assigned with the absolute deeds.
The tax lien certificates will also be valued and auctioned at the amount of taxes that owed along with the interest and administrative charges, but this is the place where all the similarities will come to an end. In the cases Tax Lien Certificates, there will not be any transfer of the property deeds during the time of auction. Once if all these tax lien certificates are sold out, then the delinquent tax payer have to pay back the lien amount plus the interest charges that is occurred. Normally, about 16% to 18% will be paid back to the certificate owner.
In case if the delinquent tax payer fails due to pay the amount due to some reasons within the stipulated time that is fixed by the governing authority, then the tax lien certificate owner cane be awarded with the deed of the property only after the foreclosing on the lien in proper manner. So get to know prior information on tax liens, tax lien auctions, government tax liens and much more.
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Thursday, January 7th, 2010
A tax lien is the lien placed on a homeowner’s property by the county or municipality in the intent to collect a debt. Specifically, it is the action taken by the government to satisfy delinquent real property taxes on real estate. The governmental agency authorizes the tax lien to collect any lien which consists of delinquent taxes, accrued interest, and the cost associated with the sales. In many jurisdictions, the tax lien is the initial lien on the property; thereby granting it permissible to be sold at a tax lien auction as a tax lien certificate.
After placing a successful bid, prospective investors at a tax lien auction would have purchased a governmental- issued tax lien certificate. Subsequently, a tax lien certificate allows the investor to obtain two (2) things; a state- mandated yield from the lien or title to the property. The yield from the lien commands that the delinquent taxpayer pays in order to release the lien. After a certain amount of time (set by the jurisdiction), the certificate guarantees you the title of the property if the delinquent taxes aren?t paid. As a tax lien certificate holder, your investment is generally safe. Occasionally, investors have lost money in such procedures; therefore it is wise to fully comprehend the rules and laws of the area that you are bidding in, and be cautious not to pay too much for the tax lien itself.
There are five (5) basic methods to invest in tax liens in the event that more than one investor seeks the same lien. The winner is dependant upon each state’s laws, of course. Firstly, the prospective investor can bid down the interest. With this method, a buyer can accept lower rates of return. The winner of the tax lien certificate is the buyer that has accepted the lower rates. The premium buying procedure suggests that the investor who is willing to pay the highest “premium” (or excess beyond the lien amount) is declared the winner. Unfortunately, the premium may or may not earn interest and the investor may or may not be reimbursed upon redemption of the lien. Some states awards tax lien certificates randomly by selecting bidder numbers for each of the real estate properties that are up for auction. This is significant in that the concept of public auctions is becoming more and more mainstream and popular with the general public. In fact, within large counties, there are substantially developed internet- based auctions allowing outside bidders to participate. Yet, another tax lien buying procedure is the rotational selection. The rotational selection gives the investor holding bidder number one the first lien offer, whom actually has the right of first refusal. However, if bidder number one chooses to refuse, he will not be offered another bid until his number appears again in rotation. The final method for purchasing tax lien certificates is to bid down the ownership. In most instances, the investor will avoid bidding on liens for less than full right to the property or sale proceeds. None-of- the- less, the bid down the ownership method allows the investor to purchase the lien for the lowest percentage of encumbrance on the property. If the investor is willing to accept that the original owner will own the remaining percentage, then he/she will be awarded the lien.
It is important that you conduct your due diligence prior to making a final decision as tax lien sales aren?t for everyone. Furthermore, there are prominent benefits as well as risk to tax lien investing. One particular benefit is that the maximum rate of return in a tax lien is much higher than other investments. Unfortunately, the payment is required at purchase and failure to pay the full amount results in the cancellation of all lien certificate purchases.
The wealthy have been buying tax lien certificatess for years and banks have also been very active in this market It’s realistically one of the most recession-proof investments out there because the returns(15-50%!) are guaranteed by the government. Visit http://www.NewHotBizOpportunity.com to get a free 7 day online course that will teach you exactly what you need to know about investing in this lucrative industry.
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Thursday, December 17th, 2009
Tax lien certificates are a little known or understood investment type that can reap tremendous rewards for their owners. Essentially they combine the potentially high returns usually associated with riskier investments with the security offered by lower income financial instruments such as bonds.
Here is how they operate:
1. The investor purchases the tax lien certificate which is secured to the property it relates to – in effect the investor is paying the property tax on behalf of the property owner.
2. As an example, the tax lien may relate to real estate/land owned by someone who has not paid their property taxes. This is where you step in – by paying off the tax lien and getting a certificate in return. This certificate entitles you to (a) interest on the lein and (b) the amount of the tax.
3. Interest payable on the property is passed directly to the certificate holder. The entire billing & collection process is done by the government administration and paid to the certificate holder. The rate of interest on the lien varies but tends to be between 8% and 50% per year.
4. Research shows that over 98% of tax lien certificate holders receive payments to the value of their investment within two years – and if they do not, the tax lien certificate holder can end up owning the property for little more than the amount that was paid for the certificate.
While you may be forgiven for thinking that tax lien investments are reserved for the very rich and experienced, you would in fact be wrong. They are quite simple and can be obtained for as little as a few hundred dollars.
Some experts believe that tax liens are one of the best kept secrets within the investment world – they offer high returns on capital and it is an investment backed by the government itself. In fact, investment expert Robert Kiyosaki has mentioned the benefits of tax lien certificates in his Rich Dad Poor Dad books.
Consider these staggering advantages of investing in tax lien certificates:
Tax liens typically earn incredible rates of interest on your investment. Where else can you achieve typical rates of 15%, 25% and more per year on a low-risk investment?
The investor is never responsible for ensuring that the interest, taxes etc are collected by the non-payer. This is the duty of the government who will handle all of this on the investors behalf.
Should the non-payer fail to settle the monies owed, the investor has the legal right to foreclose on their land/real estate for an incredibly low fee. The length of time can vary between one to three years before foreclosure becomes a possibility.
Tax lien investing is fairly simple – and arguably a lot easier to understand than stocks (and certainly less risky).
As with all investments, it’s important to be well armed with knowledge and experience on your side plus an understanding of the potential problems you may face when deciding to put some of your capital into tax liens.
Below we outline some important considerations:
1. To uncover the most profitable tax lien opportunities can take somewhat more capital and research than standard ones. It involves visiting tax lien sales which can be time consuming – and before bidding on anything you should consider visiting the real estates mentioned in the tax lien sales. This can be harder than it sounds because the amount of information available is very basic.
2. Remember, that aside from buying the tax lien, you will also need to pay the taxes on the property until it is redeemed. Once you do invest in tax liens, you cannot retrieve your initial investment – instead you must wait till the lien is redeemed or the property falls into foreclosure.
Tax liens are wonderful things – high yields, the opportunity to pick up real estate for just pennies on the dollar and returns that are backed by the U.S. government. Start investigating them now before they become common knowledge.
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