I’m Ted Thomas, and today I’m going to answer your question, “What is a tax lien on a house?”
The topics I’m going to cover are:
- What Is a State Tax Lien?
- Doing a Property Tax Lien Search
- How Affordable Is a Tax Lien Certificate?
- How Much Are Tax Lien Certificate Interest Rates?
- Get Discount Real Estate Without a Mortgage Lien
- Tax Liens Are a Low-Risk Investment
Let’s go through this step by step. First, we’ll talk about the tax lien, and then we’ll talk about the local government.
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What Is a State Tax Lien?
What is a state tax lien? If the local government cannot collect the property taxes that a property owner owes, they’re going to take action.
They will issue a piece of paper, a tax lien certificate. It will just say “tax lien” on it, and they want to sell it.
So, let’s talk about how to buy property with delinquent taxes.
Doing a Property Tax Lien Search
First the local government will advertise it in the newspaper and online on the county website.
They might not have pictures or even have addresses, but the tax lien properties list will have property ID numbers. Every property has an ID number, and you need to choose the ID number of the property you want.
You can go online and look it up to see what it is. That way you know what you’re going to buy. Maybe, it’s a 3 bedroom, 2 bath, and you’re going to pay the tax on that.
How Affordable Is a Tax Lien Certificate?
The government holds tax lien sales, and anybody can buy a tax lien certificate.
Some of them are $50, and some of them are $1,000 and some $20,000. It depends upon what the tax was on that house.
Buying a tax certificate gives you power. You now control the property. It can’t be sold or mortgaged. Nothing can happen on that property until you get paid.
How Much Are Tax Lien Certificate Interest Rates?
How are you going to get paid? Depending on the state, you’ll receive 16%, 18%, 24%, or even up to 36%.
You buy the certificate, and then you just wait, not doing any work. It’s a passive investment, and you did it online. What could be easier, right?
Let’s use Florida as an example. At the end of one year, they owe you whatever you paid plus up to 18%.
The 2nd year, they’re going to owe you another 18%. So, now they owe you up to 36%. It can’t go any longer than 2 years in Florida.
You’re either going to get paid on that certificate, or you’re going to own the property.
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Get Discount Real Estate Without a Mortgage Lien
If a property goes to tax auction, the mortgage is wiped out.
What does that mean to you? That means you just got a property without a mortgage. The mortgage is gone because it’s wiped out by an act of law.
What did you pay for the property? You paid 2 years of taxes.
If it was $2,000 the 1st year and $2,000 the 2nd year, you have $4,000 dollars invested, and you own a $100,000 house. Or you might have $40,000 dollars invested and you own a million dollar property. It’s whatever you paid in taxes on the tax lien.
Tax Liens Are a Low-Risk Investment
There are over 3,000 counties in the United States, and about half of them sell tax lien certificates. The other half sell tax deeds.
Tax lien investing is predictable, certain and secure. It’s pretty tough to lose your money if you give it to the government, and they give you a check back.
Don’t worry about the mortgage. It’s going to be wiped out.
Don’t worry about IRS liens, they’re junior liens on property. We don’t have to be scared of the IRS. Federal tax liens are way down the pecking order when it comes to getting paid on a property.
Conclusion
What is a tax lien on a house? It’s a way for a savvy investor to earn a passive income from a low-risk, high-yielding alternative investment that’s secured by real estate.
Tax lien certificates pay interest rates of 16%, 18%, 24%, and even up to 36% interest, making them an excellent way to keep ahead of inflation. Additionally, if you don’t get paid, then you get the property mortgage-free
If you’d like to know more about how to profit from alternative real estate investing, 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.
You can learn how to reap the huge rewards from tax lien and tax defaulted property investing! 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!
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.
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