What Is the Difference Between a Tax Deed and Tax Lien?

I’m Ted Thomas. What is the difference between a tax deed and tax lien? I’ll explain and also tell you some inside tips on how to make money.

Want to learn how to make massive profits in real estate? Would you like to buy mortgage-free homes for pennies on the dollar? Or earn double-digit interest rates secured by real estate? Then you don’t want to miss this FREE Mini Course.

Tax Lien Certificates

First I’m going to give you the who, what, where, when and why of tax lien certificates.

So, who issues these things? The state legislature authorizes the county to do that, and the county will issue a tax lien certificate if a real estate owner hasn’t paid property taxes on their property.

50% of all counties in the United States will sell tax lien certificates.

Tax Lien Certificate Interest Rates

When you raise your hand at auction and buy a tax lien, you’re buying a certificate. You will not get possession of the property. You only own a piece of paper when you buy a tax lien certificate.

So, why would you want to buy that? The reason you’d want to buy that certificate is because the county will pay you 16%, 18%, 24% or all the way up to 36% interest on that certificate if it stays outstanding.

It’s a chance for the investor, especially a newcomer, to make money in a predictable, certain and secure environment.

Tax Lien Certificate vs Bank Interest Rates

If you own that certificate, and it’s paying 18%, that would be a percent and a half every month for the 1st year.

That’s a lot better than the banks paying 1% annually.

is buying tax liens profitable interest rates

Why Counties Issue Tax Lien Certificates

Why on earth is the county selling tax lien certificates? They’re selling those certificates because the county has a ton of bills. The county pays for the police department, fire department, and schools. All those bills have to be paid.

The county collects property tax and uses the revenue to pay all of these different entities.

So, tax lien certificates are always sold at a county or municipal level.

Tax Lien States Are Benevolent

Any state that sells tax lien certificates is a benevolent state. Why do I say that? They’re not just confiscating the property.

If they sell a tax lien certificate, sometimes the certificate can be outstanding for 6 months, a year, or even up to 3 years.

They’re not throwing those people out on the street; they’re saying “You owe us the money, but we’ll give you time to pay it.”

The other side of that is tax deeds.

Tax Deeds

The other half of the states will sell tax deeds. What does that mean? What is a tax deed property?

Well, that means that when a property owner went into default on property taxes, the county simply said, “If you don’t pay in so many days, then we’re going to seize the property.”

In other words, they’re going to evict the property owner, and the county is going to own that property.

I have a free gift for you, a special Master Class that will show you how to profit with tax lien certificates and reveal the secrets of tax deed investing. Get your FREE gift today.

Deep Discount Real Estate at Tax Deed Auctions

The county doesn’t want the property. They’re in the tax business, not the property business. So, what they’re going to do is auction it for the back taxes plus any fees that were owed.

Why would you want to know about that? Because they’re selling properties for pennies on the dollar.

What if you could buy a property for a 60%, 70% 80% or more discount? Do you suppose there’s enough margin there?

auction discounts

Tax Liens vs Tax Deeds

What is the difference between a tax deed and tax lien? It’s a huge difference.

In one case, you’re going to get a piece of paper that’s a tax lien certificate. No possession of the property, you just wait to get paid.

When the people come in and pay, then you get paid.

In a nutshell, with tax lien certificates, you’re going to end up earning interest on a predictable, certain and secure investment. The interest rate depends upon which state is selling it. You’ll be able to do that online.

With tax deeds, you’re going to get a property. It’s going to be yours.

Are you prepared to sell it? Fix it? What are you going to do with it? What’s your exit strategy?

Types of Properties Sold at Auctions

Let’s think about how broad this business is. Tax lien certificates could be on every kind of property. Obviously, on homes, but you could have it on farms and ranches, or you could have it on a commercial building downtown.

For example, I’ve gone to auctions and bid on a certificate for a huge shopping center. They owed $100,000 in taxes, and I bid because the certificate was going to pay 16%.

If I go to a money market, I’m not going to get 16%. If I go to Bank of America, I’m going to be lucky if I get 1%. So, you’re getting the idea.

With few exceptions, all property is taxed that’s privately owned in the United States. All of it can either have a tax lien or a tax deed.

Can You Buy a Tax Deed Property With a Credit Card?

From time to time, people ask me the question, “Can you use a credit card?”

You can’t use a credit card in all places. However, I have some students, like Bill who works in Michigan, and he bought 60 properties just using a credit card.

So, the answer to the question is, yes, some states will allow you to buy with a credit card.

I personally couldn’t believe that, so I went to New York, and they allowed me to buy a $300,000 property with a credit card. I only needed to put 30% down, so I did it with a credit card.

how to achieve financial independence credit cards


There’s a big difference between a tax deed and tax lien.

With a tax lien certificate, you don’t take immediate possession of the property, but you earn 16%, 18%, or 24% interest. In Chicago, they pay up to 36% interest.

Think about that. You could have a nice portfolio growing quickly with that.

In tax deed states, they confiscate the property and sell it. Starting bids begin around the amount of the back property taxes, and you can purchase property for pennies on the dollar.

Additionally, the county wipes out the mortgage and any liens that are on the property, so you get the property mortgage-free.

If you’d like to know more, Ted provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.

Ted Thomas classYou can learn how to mitigate the risks of buying tax deed properties and reap the huge rewards! Get started today by taking advantage of Ted’s Free Master Class! Act now, it costs you nothing and will give you a big head start!

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Ted Thomas

Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.

The Ted Thomas Difference:

  • Ted is recognized as America’s Tax Lien Certificate & Tax Deed Authority and has been helping people with investing in tax defaulted properties for over 30 years.
  • Ted has built a team of certified coaches that have 70 combined years of auction experience and are available to his students by phone to guide and mentor you to avoid getting overwhelmed or worse, losing money
  • Ted has ironclad PROOF that what he is teaching you does work. With hundreds of successful students providing testimonials and a 4.9 Google rating which is unheard of in this industry.
  • Ted and his staff don’t hide behind a website; they can be reached during office hours at 321-449-9940.

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