Buying a Tax Lien Certificate

Investing in a Tax Lien Certificate has the ability of providing the investor with a very high rate of return. When a property owner becomes delinquent after not paying his or her taxes for several years, the government has a tax sale or auction to force payment for the back taxes. Every state has different laws that govern the process of collecting delinquent taxes. It is extremely important to research each state law before starting your investment to learn what kind of return you will have on your certificate.

When you try to buy the certificate, it is sold at its face value plus interest and any administrative charges. Depending on the state and the number of prospective investors, the interest rate of the lien is either bid down or the entire purchase price is bid up in what is called a premium bid. When the certificate has been bought, the owner of the property must repay the amount of the lien to the certificate holder, plus an interest rate which usually runs between 16-18%. The owner of the property has a set redemption period to pay the lien. If the lien is not paid by the set deadline, the investor of the tax lien certificate can foreclose on the lien and obtain the deed to the property.

Tax Lien Certificates are a profitable investment and you cannot lose.  You have the real estate as security just in case the properties owner does not pay off the loan. This is why buying tax lien certificates have been becoming more and more popular with its winning potential.

Research is required when investing in a Tax Lien Certificate. Each state has different laws and interest rates in the sale of tax liens. It is important to know the state’s interest rate and redemption period to gain total control of your investment. The following is a fractional list of states that offer tax lien investments along with the present rate of interest.

 ALABAMA 12% Three  year redemption period
 ARIZONA  16% Three  year redemption period
 ARKANSAS  Limited Warranty Deed Three  year redemption period
 CALIFORNIA  18% Two  year redemption period
 COLORADO  9% Three  year redemption period
 CONNECTICUT  18% Two  year redemption period
 DELAWARE  15% One year redempton period
 FLORIDA  18% Two  year redemption period
 GEORGIA  20% One year redempton period
 ILLINOIS  36% Two  year redemption period
INDIANA  10% Redemption period varies
 IOWA  24% Redemption period is 1.75 years.
 KENTUCKY  12% Three  year redemption period
 LOUISIANA  12% Three  year redemption period
 MARYLAND  10% – 24% Redemtion period 6 months – 2 years
 MASSACHUSETTS  16% Six month redemption period
 MICHIGAN  15% or 50% One or two year redemption period depending on rate
 MINNESOTA  12% One year redemption period
 MISSISSIPPI  17% Two  year redemption period
 MISSOURI  10% on taxes and penalties Two year redemtion period
 MONTANA  10% Two to three year redemption period
 NEBRASKA  14% Three  year redemption period
 NEVADA  12% 120 days for vacant land, 2 years for developed land
 NEW HAMPSHIRE  18% Redemption period 2 years varies in municipality
 NEW JERSEY  18% Two  year redemption period
 NEW YORK  14% One year redemption period
 NORTH DAKOTA  9%  to 12% Three  year redemption period
 OHIO  18% Redemption period as short as 1 Year
 OKLAHOMA  8% Two  year redemption period
 OREGON  5% Two  year redemption period
RHODE ISLAND 16% One year redemption period varies depending on the municipality
 SOUTH CAROLINA  7-8 % plus 4% added to 2nd year Redemption period one year to 18 months
SOUTH DAKOTA  12% Four year redemption period
VERMONT  12% One year redemption period
 WEST VIRGINIA  12%  Redemption period 18 months
 WISCONSIN  18%  Two year redemption period
 WYOMING  18%  Four year redemption period
 WASHINGTON D.C.  1 and 1/2% per month  Six month redemption period

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