Explaining Tax Lien Certificates

The simplest way to understand Tax Lien Certificates is to realize all real estate is taxed by the county or municipality. Taxes are collected to provide many different benefits to citizens. Every property owner is assessed for property tax one or more times each year. Tax districts & municipalities receive their revenue from property taxes.

In many states, if the property owner does not pay the property taxes the county or municipality will accrue the taxes and penalties for many years. Ultimately, if the property owner does not pay the taxes, the county or municipality will sell or auction the property at a tax sale or auction.

Counties issue a tax lien which in many states are sold at an auction, These certificates allow the counties and municipalities to collect the tax revenue they need to run the government for each year — rather than wait for the property to be auctioned to collect the taxes due.

In other words, the county or municipality sells a tax lien certificate that is nothing more than a certificate that shows the taxes due on “X” property.

The objective in selling the certificates is to allow an investor (rather than the property owner) to pay the property tax on “X” property. This benefits the county with immediate revenue and benefits the investor with a low-risk certificate that has a high-yield interest rate — which could be from 10% all the way to 50%.

Tax Lien Foreclosure is the formal term for the process in which counties or municipalities collect their money. The sales for delinquent property taxes occur at every level of government, from the county to hospital districts, to water districts and to transportation districts. All these government agencies have taxing authority and the taxperson’s ultimate remedy is a foreclosure.

Tax Lien Foreclosure is the formal term for the process in which counties or municipalities collect their money.

The sales for delinquent property taxes occur at every level of govern­ment, from the county to hospital districts, to water districts, to transportation districts.

All these government agencies have taxing authority and the taxperson’s ultimate remedy is a foreclosure.

The basis of our tax system dates back to the foundation of our country. The system was brought over from England. From the English, we learned that the basis of a person’s wealth was land holdings. Consequently the land provided the tax assessor a method of attach­ing the property owner’s wealth. Real property cannot be hidden and it’s easy to assess.

Taxation is a complex science, as the property is not the only thing being assessed. The prop­erty is the security for the tax collector because the owner cannot conceal or move it. Because of this lack of mobility, many agencies attach their payment lien (assessment) to this rigid structure (the property).

Many different authorities assess property owners. Non-payment to these entities could lead to a loss of the asset by the owner to the county or municipality district at a tax lien auction/sale.

Fortunately, most property taxes are assessed at the county level. The various districts aren’t necessarily uniform in their procedures. Your county might issue you one property tax bill that covers all tax authorities in your area. But, there are more than 3,000 counties in the United States, and they don’t act uniformly. The fact that you now know they act independently will be a real competitive advantage for you.

Knowledge is power, and the power of the knowledge you’ll acquire from this book reveal many hidden opportunities in the tax lien certificate arena.

It’s not unusual for different districts to serve their own assessment bills to the property owner. Generally, the county will serve a bill and after collection of that bill, the county administrator will distribute the money to the various districts or agencies of the local government.

To receive a free report on Tax Liens & Tax Deed Certificates, visit us online at www.ultimatetaxlienguide.com or www.tedthomas.com