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Tax Lien Certificates - A Profitable Investment

June 06, 2011 | Comments: 0 | Views: 66

If you ask some one that participates in tax lien auctions or some one that owns tax credits, they will tell you that taxes can many times be very profitable.

It is a fact that because so many people have researched local auctions for sales in real estate due to delinquent taxes, a whole new enterprise has opened up. The more people discover these forced sales, the more popular they are becoming.

One of the first questions that many newbie's ask about investing in tax lien certificates is, are they safe?

Lien certificates aids the government in allowing them to recover tax revenue that is lost more easily. They were created so the government would be able to collect on those back taxes and not have to take possession and ownership of that property.

The county or state taxing authority can place a lien certificate on the property owner when they haven't paid the real estate taxes or the federal government can do the same for non-payment of personal profit taxes.

When a lien is issued against a property, the owner loses control of said property until the debt has been paid in full. They cannot gift, transfer, or use the title as collateral.

After it is filed, it can be sold at a federal, state or county auction. In some instances, tax liens can be offered over the counter by taxing authority.

Buyers will bid on the lowest amount of interest they're willing to accept or provided the opportunity to purchase lien certificates at random by drawing lots.

After it is purchased, and the investor pays the full amount on the tax bill, one of two things can happen. If the original owner pays the debt back on time with interest specified by the investor, the lien is then released and the original owner gains back ownership. However, if the lien certificate is not paid in the specified time, the property in question is then handed over the investor, giving him/her full ownership of said property.

This process is completely in the control of the government, making tax certificates very profitable and safe. For more information regarding the sale of tax lien certificates, you can contact your county.

In conclusion, it is in your best interest to speak with a real estate or tax attorney before investing in certificates. A tax attorney will better be able to determine if tax lien certificates seems to be a good fit for your risk management profile. One last thing to know is all certificates have to be paid in cash, right away or at least within a 48 hour time frame after the auction takes place.

For more information like this and other related tax lien issues, visit Blayne Penton's website about Tax Lien. We can prevent IRS bank & wage levies, prevent or lift tax liens, stop wage garnishment and will continually strive to get you the best possible settlement.

Source: EzineArticles
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