Understanding Property Tax Auctions
- Author Brent Crouch
- Published December 19, 2010
- Word count 418
In order to better understand the concept behind a property tax auction, one must first understand government - at least on a surface level.
That is to say, one must understand that there is an overlying, federal government, under which there are state governments, and finally there are governments for each county. Each of those governments survives based on the tax dollars that are paid by the residents of each. When the taxes are not paid - even a portion of them - the government, like an individual not receiving an expected paycheck, is faced with a dilemma. After all, that money has been considered in the budget for the year and is needed to properly fund government agencies, schools, and other organizations generally supported.
When a homeowner fails to pay taxes over a long period of time, the government is forced to take action to collect the missing funds. This is the purpose of a tax lien. This is a statement placed against the house that says, like a mortgage does, that should the house be sold, any gains must first be used to pay off what is owed. In this way, the government is able to place some collateral on the debt. Because the government is missing that money and would like to collect on it as soon as possible, they sell the lien as collateral-backed debt, which the buyer can collect on.
The homeowner must then pay the debt to the new owner of the lien or else, ultimately, face the property being foreclosed on. The good part for the investor, who purchases the lien, is that the homeowner must also pay interest as a late payment penalty.
The government gives up the right to that interest in a way to secure money in the short term, whereas the investor, who is seeking a place to put his or her money in order to make more on it, now has the opportunity to do so. The interest rates on these tax liens are generally quite high and are, therefore, a better alternative to other investing methods that are seeing lower returns.
In order to invest in tax liens a person must have the capital to spend on the spot. He or she must also pre-register for the public auctions and verify that he or she is up to date on all taxes and other outstanding debt. These investments are not for everyone, but in the right hands, they are a win-win for government and investor.
Brent Crouch is the owner of Tax Lien Properties.net. He has dedicated this site to providing a free state tax lien list. http://www.taxlienproperties.net/state-tax-lien-list/
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- 10 essential tax-saving strategies for landlords: Maximise your rental income
- A Comprehensive Guide to Navigating the Process and the Role of Customs Brokers in the UK
- Outsourced Accounting Services for UK Businesses: A Cost-Effective Solution for Financial Management
- Top 8 Self Assessment tax return software
- How to Close a Limited Company in the UK
- Maximizing Your Finances: Unleashing the Power of CPA Services
- VAT penalties – New rules
- TAX-FREE STRATEGIES IN AN UNCERTAIN ECONOMY
- 2022 Energy crisis and failure to connect Reality.
- When Are Corporate and Personal Taxes Due in Canada in 2021?
- You Would Never Have Thought That Having Accounting Internship Could Be So Beneficial
- ACTIVATION OF UAN
- Focal motivations behind getting a Tax direct for Small Business Firms
- Avoiding the flood — tax issues with water rights in agribusiness
- Social security benefits for a family (COVID-19)
- How to use QuickBooks Component Repair Tool?
- Do you want to reduce your taxes for next year?
- Will you be responsible with your tax refund?
- Getting started with QuickBooks Enhanced Payroll in Brief
- Are DSTs Right For Your 1031 Exchange
- Tax Return Makeovers By Kenya Woodard
- Why have all crypto tax attempts failed?
- Are You a Corporation? Know Why Consulting a Tax Accountant Is Vital
- Share capital or share premium for your Dutch company?
- Everything investors should know about 1031 sponsors
- Why is the income tax so high in UK?
- Should I do my own tax return?
- Get More Money Back on Your Tax Return with help from the Tax Cuts and Jobs Act
- Don’t Fall Victim to these 3 Tax Scams in 2018
- Find Out If 72(T) Penalty Free Income Is a Solution for You