WHAT IS A TAX DEED SALE IN FLORIDA?
What is a tax deed sale in Florida? If you want to buy Florida properties for pennies on the dollar, then tax deed sales are for you! I’ll show you how it works!
Today I’ll answer your question, “What is a tax deed sale in Florida?”
Property tax deed sales are really auctions where the property is sold to the highest bidder.
Florida conducts 2 unique and different auction processes to collect property taxes. In both of the auctions, the investor with knowledge can make money. It’s a simple matter of studying and understanding.
So what is a tax deed sale in Florida? To answer the question and keep it simple, it is really an auction which is conducted by the local county officials.
The objective of the auction is to sell the tax defaulted property that has been confiscated. The property which is being sold formerly belonged to a property owner that failed to pay property taxes.
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WHAT IS A TAX DEED SALE IN FLORIDA? – PROPERTY TAX
I’ll discuss how the system works but first, let’s talk about the fundamentals of property tax.
The state of Florida is governed by an elected group of people called a legislature. They make and create laws which citizens are required to follow.
The legislature and the county government work together.
The state legislature mandates and authorizes the local county, usually a treasurer, to levy taxes and collect the taxes. Once the levy and collection process start, the treasurer will take time to confiscate properties from owners who do not pay taxes.
WHAT IS A TAX DEED SALE IN FLORIDA? – TAX DEFAULTED AUCTIONS
The treasurer is authorized by the legislature to confiscate and then sell the tax delinquent property at a public auction that some people call a tax sale.
The rules for selling are simple. Auction the property to the highest bidder and delete the mortgage from the property once it’s sold.
That means the local government will announce in the newspaper and on the county website, a tax sale which is really an auction usually on the courthouse steps.
Anyone may attend and bid. The highest bidder is the winner.
WHAT IS A TAX DEED SALE IN FLORIDA? – MORTGAGE AND ENCUMBRANCES
Does a mortgage survive a tax deed sale in Florida? If the property had a mortgage or other liens, the county will remove, that is delete, those liens/encumbrances from the property at the official county public records.
The property at a tax sale auction is sold free and clear of mortgages or deeds of trust.
The treasurer has deleted liens from the property. This is an act of law. The highest bidder receives a deed to the property with no mortgage or encumbrances.
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WHAT IS A TAX DEED SALE IN FLORIDA? – TAX LIEN CERTIFICATES
Florida has two auctions. One auction takes place to sell tax lien certificates.
What happens when someone buys a tax certificate in Florida? If the certificate is unpaid, the property will transfer to the party that purchased the tax lien certificate.
Tax lien certificate auctions are the result of a property owner not paying property taxes.
WHAT IS A TAX DEED SALE IN FLORIDA? – REVERSE AUCTION
The bidding process at a tax lien certificate auction does not give the bidder possession of the property. You are only bidding on the certificate and an interest rate.
It’s a reverse auction starting at 18% interest and going down.
If no bids are received, the county will try to sell at another tax lien certificate auction.
If no bidders appear, or come forward, the property will be sold at a tax deed auction.
WHAT IS A TAX DEED SALE IN FLORIDA? – TAX DEEDS
The county does not want the property but wants to sell the property, even if it’s a low price.
The county’s objective is to sell the property at a tax deed auction and return the property to the tax roll, which simply means the property will return to a list of property owners who are acting responsibly and paying property taxes promptly.
By an act of law from the state legislature, the county will delete, extinguish, remove the mortgages or deed of trust liens from the property at the time of the auction.
The county will sell the property for close to the back taxes. This is the starting bid when the tax defaulted auction begins.
Savvy investors pay bargain prices for auction properties.
We hope you enjoyed Ted’s lesson, “What Is a Tax Deed Sale in Florida?”
Florida holds 2 types of auctions on tax delinquent properties, tax lien auctions and tax deed auctions.
The state will begin with a tax lien auction, where tax lien certificates are sold. These are reverse auctions where the interest rate on the certificate is bid down. The bidding begins at 18%.
If no one bids on the tax lien certificate, the county will try to sell the certificate again at a subsequent tax lien auction, However, if it still doesn’t sell, then the county will sell the property at a tax deed auction.
At a tax deed auction, the property is sold outright. The bidding begins around the amount of the back property taxes owed, and it’s possible to purchase property for pennies on the dollar.
Additionally, the mortgage and other encumbrances are removed from the property, so you can get deep discount, mortgage-free property at a tax deed sale!
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