Tax Lien Foreclosures Can Be Challenging

Many are familiar with foreclosures but tax lien foreclosures remain unknown territory. Yet if one tests the waters carefully before entering, tax lien foreclosures can be challenging and profiting.

The foreclosure is a process by which money for unpaid dues is realized. Tax lien foreclosures relate to payment of property taxes. When one buys a unit the lender adds the property taxes to the mortgage payments. These are divided through the year. The property tax can be paid every three months (quarterly) or annually. These taxes support the government in its various activities like maintaining building and roads, parks, police and firefighting force etc. In other words the taxes are the lifeline of the government.

If a person does not pay the tax then the government places a lien known as the tax lien on the property. By it the government acquires the right to auction the estate, and this is known was tax foreclosure sale.

Any person can buy the tax lien and earn some profits as interest. When the property owner comes forward to clear the tax dues at the office of the county clerk, the owner has also to pay penalty fees. The county clerk then issues a cheque to the person who had bought the tax lien. The buyer will thus get what he had invested together with interest accrued and penalty charges. It can be a profitable situation.

The property owner can take a long time to clear dues. Meanwhile the government gets the money from the purchaser of the tax lien to run the show and the investors gains from the investment. This makes everybody happy. In some cases the profit for the investor can be a tidy sum. Many are now turning to buying tax liens. It is an easy and safe way to invest in real estate. The profits are high and large investments are not required.

One can learn about tax liens by studying the newspaper advertisements or by contacting the office of the county clerk.

Thus tax lien foreclosures are a special kind of foreclosure sales. It happens when the owner of a property fails to pay tax dues - whether personal or on a property. The taxes may be due either to the federal or state governments. When the government forecloses on the property to realize dues it is known as tax lien foreclosures.

The tax lien is sold at a property public auction. It is generally sold to one who bids the highest and the money goes straight to the government coffers. For real estate investors buying tax lien foreclosures is an interesting and easy way to earn neat profits. The government is so desperate to lay hands on any amount of money that often these liens are undersold. It can be in some cases 30% or 60% less than the actual amount due to the government. For savvy investors tax lien foreclosures are hot muffins.

The related information can be got online also apart from newspapers and the offices of county clerks.

Kevin Simpson, has been working on ForeclosureDataOnline.com studying the foreclosures market, helping buyers on the finer points of foreclosed homes for sale. Try to visit ForeclosureDataOnline.com and begin your foreclosures by state search.
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Kevin Simpson, GM Sales & Marketing, ForeclosureDataOnline.com

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