Tax Liens Versus Tax Deeds

Many new investors do not know the difference between a tax lien and tax deed. They have heard that tax liens are a great investment and that one can get properties with them. So the investors confuse liens and deeds. For those of you who think that buying a tax lien is a good way to get property, you are wrong.

A deed is a document that transfers ownership to property. A tax deed is a special type of deed resulting from nonpayment of taxes. A deed sale is the forced sale, conducted by a governmental agency, of real estate for nonpayment of taxes. It is one of two methodologies used by governmental agencies to collect delinquent taxes owed on real estate. A taxpayer is given many opportunities to pay his taxes. After multiple warnings, the county puts his property up for sale to investors, often for as little as the taxes, penalties and fees that the taxpayer owes. At a deed auction, the winning bidder receives the deed to the taxpayer's property. In some cases, the taxpayer may still have a short time after the sale to redeem the property; otherwise, the investor becomes the legal owner of the property.

A tax lien is a lien imposed by law upon a property to secure the payment of taxes. It may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes. A lien certificate is nothing more than a lien on a property for not paying taxes. Each and every year, owners of real estate have a tax lien (aka financial obligation to pay taxes) placed on their real estate. If the property taxes are paid on time, the lien is removed. If they are not paid in due time, the county will allow investors to pay them on behalf of the real estate owner.

With a tax lien, an investor purchases a lien; he is not buying the property, but paying the taxes on a tax delinquent property and putting a lien on the property so that if the property owner doesn't pay the amount of the lien plus interest and penalties, in a given amount of time (the redemption period), he can foreclose on the property.

With tax deeds, an investor goes to a tax deed sale (auction) and purchases a tax deed; he is actually purchasing the property.

The reason that tax liens are extremely profitable is that high interest rates of return are fixed by law. In other words, regardless of what happens to the economy, tax lien certificates are 100% guaranteed by the United States' government. Even if the stock market were to crash or interest rates were to drop, the United States' government would still guarantee your rate of return.
The sky is the limit.If you are interested in learning more about Tax Deeds and Liens, you should click on the link below. It is a great place to get started if investing in real estate is what you are looking to do. Yes, you can still make a fortune in Real Estate with this Ultimate Real Estate system. >>> http://bit.ly/1ukjzFZ  

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