Have you ever wondered what a tax lien is? Have you even heard of it before? Most people understand that if they don't pay their mortgage that the...
Have you ever wondered what a tax lien is? Have you even heard of it before? Most people understand that if they don’t pay their mortgage that their home will be taken away and the same goes for their car payments. Despite this, most people have never even heard of a lien, let alone a tax lien. Especially in times of such economic uncertainty it is important to understand what a tax lien is.
If you fail to pay your taxes, be they on real property or income the government works hard to get that money from you. They send you notices to try and get your attention and to get you to contact them when you are delinquent on your payments. When this doesn’t work they have no choice but to put a tax lien on your property. This lien makes it so that legally you cannot transfer the title of your property or offer it as collateral until the debts have been paid off.
If the property that is having a tax lien attached to it is financed then the mortgage company can pay the taxes. They will often due this to avoid a high risk situation. When a tax lien is on a property that they have loaned money on these companies risk losing them should a tax foreclosure take place.
After paying off the taxes the lenders require back payments through the use of an escrow account. These accounts can help prevent the attachment of a tax lien to your property, because they ensure that a monthly amount of your mortgage payment goes towards paying off the taxes at the end of the year. Those whose homes are not financed would be wise to put away to find an average figure to save each month so that their taxes are not such a huge hit on their monthly budgeting when they get their tax bill.
A tax lien is not limited to the failure to pay property taxes. When income taxes aren’t paid the government also has the right to seize your property. In order to avoid this problem a simple visit with an accountant can help you learn how to manage your money and figure out how much money should be taken out of each paycheck to avoid needing to make a lump sum payment each April.
Avoid a tax lien like you would he plague by preparing ahead of time and understanding what can cause you to get a tax lien in the first place. By doing this there will be no lump sum payment surprises and you will be debt and tax lien free in any economy.
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Why do the wealthy keep getting wealthier? What do they know that we don’t? The wealthy know that tax lien investing is a market in which the opportunity to make money is too great to pass up. Tax lien investing is growing more and more well know though. The rich aren’t the only people getting richer through it anymore. Anyone can take a chance on this real estate venture.
Tax lien investing is a great way to gain control over your money. By putting your money into the hands of banks and stocks and shares you are letting other place it into high risk exchanges. With tax lien investing you can control how high risk each of your investments is. The only one that will be at risk of compromising your assets will be you.
Through tax lien investing you can go the route of tax lien certificates or of tax deeds. If you pick tax lien certificates you are ensured through the government that you will make at least 18% interest off of your investment. Investing in tax lien certificates can take up to 1 to 5 years before a return in seen, though. For this reason many people prefer to invest in tax deeds and many states offer that as the only option.
Through purchasing tax deeds the investors become the owners of the property. Through this form of tax lien investing they are able to rent, least, flip and resell, simply resell, or own their properties. They can have the chance to live in a home free of mortgage payment, create a stable income through leasing and renting, or make a chunk of change through flipping and/or reselling the property.
Through tax lien investing you can accomplish a lot in the realm of real estate. You can create opportunities for flipping, renting, leasing, owning, and/or reselling properties. Many investors prefer to flip and then rent. They can take out a small equity loan to improve the property and then rent it and quickly make back all of their money. This form of investment helps to create a stable income for the future.
Through tax lien investing you can create an affluent lifestyle for yourself that you may have never thought possible. By researching the properties and bidding on the right ones at auction you can create an income that is stable and regenerating. You can feel secure knowing that you are in control of your investments. Tax lien investing is also a great option for anyone interested in the real estate industry.
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A lot has been said about tax sales recently. They seem to be all the rage in the real estate industry. Yet, many people don’t know what they are. They don’t know what they consist of, how to get involved, or if they even care to be involved with these tax sales. While tax sales are often mentioned in passing, not much is known about them.
Tax sales are auctions held by the county auditor where properties belonging to delinquent tax payers are bid upon. They come in two forms; tax lien certificates and tax deeds. With tax lien certificates the government gives you a percentage of interest (18+ %) upon your payment over the course of however many years are decided upon (varying by state) and with tax deeds the investor gains ownership over the property (sometimes with encumbrances attached, such as paying off the owed taxes).
As an investor you can also attempt to purchase properties before the tax sales even occur. If you want to do that you’ll need to get yourself a copy of the list of properties that will be put up for auction. By visiting your county auditor or accessing their website you will most likely be able to secure a copy. The next step would be doing a bit of research and contacting the current owners.
By contacting the owners you can try and work out a deal to get the property before anyone else does and without the stress of having to compete at auction. Tax payers who haven’t paid up to the point of the tax sales generally don’t have the money and are in a stressful situation themselves. They are often willing to work with investors and will let them secure a great deal, because it helps them out as well.
Make sure that you also research the properties. Research is essential to successful investment, because you need to know what you are getting yourself into. It is possible that the property could be in poor enough condition that even a small amount of money spent at tax sales would not be worth it. So, drive by, talk to the owners, do some internet research, whatever it takes to make a good decision.
If you are looking for an opportunity to make 18 to 50 % on your investments then you should look into tax sales. These real estate investments could be worth your time and money. You are guaranteed a certain percentage through tax lien certificates and can come out even more on top by investing in tax deeds. Tax sales are definitely “in” right now.
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What can you do to get that tax lien off of your aching back? How can you handle the stressors of the government knocking down your door with all of its requests and demands for payment on your overdue taxes? Handling a tax lien isn’t really all that difficult, you just need to know your basic options and move forward from there.
Before the government issues a tax lien they make more than 1 attempt to contact the owner. If you have been contacted in this manner then the best thing to do would be to contact them and figure out how to pay off your delinquent taxes, so that your property will not be sacrificed.
For owners that have a mortgage on the property they have the option of using an escrow account to help prepare for the huge last minute tax bills that coming rolling in each year. Oft times the lenders will pay of the ravenous government agencies, so that the property which they have already risked a lot of money on won’t be taken out from under them. The lenders then require the owners to repay them for the tax lien fees through the use of their escrow account.
Many properties with a tax lien attached are not financed, however, and in these situations things need to be handled a little differently. Many people choose to sell their property. This is a little tricky, but not quite. A tax lien property cannot have its titled transferred and because of this the cost of paying off the tax lien must be written into the buyers closing costs.
Another choice is simply to leave the handling of the property to the government. Just let the property and the tax lien go. The government will then sell the property at a tax deed auction or as a tax lien certificate to investors. Either way the problem is out of your hands.
A tax lien may seem like a monstrous task that is insanely boring hard to understand how to handle, but in reality it is quite simple. Just do your homework and talk to the right people and you can have the issue resolved quickly.
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