3 Ways To Profit From Tax Lien Certificates

When you buy a tax deed there is really only one way that you can make a profitable return on investment and that is to sell or rent the property. However, when you purchase a tax lien certificate, there are three ways that you can profit from your investment. These three ways are summarized in this article. Read on to find out more about them.

The first and most obvious way to make a profit on tax lien certificates is with the redemption of the lien. The delinquent property owner redeems the lien and you, as the lien holder, will receive the certificate amount of the lien plus any interest and penalties that have accrued. Since an annualized rate of interest is offered in most states, you will earn more money the longer the lien is outstanding and before it is redeemed.

Tax Lien Certificates – The Hidden Investment Secret

How would you like to gain 16%…18%…24%…even up to 50% on your investment? The government, irrespective of what goes on with the stock market, rising prices, recession or bank rates of interest, securitizes & guarantees the extremely favorable rates of return of tax lien certificates.

This little-known secret is often referred to as the “wealth maker”, and very few people recognize or take advantage of their benefits. Introducing the Tax Lien Certificate. In many counties throughout the U.S., local governments are owed millions of dollars in outstanding and delinquent property taxes.

Purchasing Tax Lien Certificates

It is never a pleasant experience when a property owner loses the ability to pay their annual property taxes. However, when a property owner does becomes a delinquent taxpayer, it is up to the municipal government to collect owed property taxes. As such, the local government initiates a tax sale where a tax lien certificate, representing your unpaid taxes, can be auctioned off to the highest (or lowest) bidder.

Tax lien auctions work like this: A jurisdictional court orders a tax lien auction to sell tax lien certificates representing all the unpaid property taxes in the county. Depending upon the state, and the nature of the tax sale (it can be an auction for Tax Deed Sales or Tax Lien Certificates), you can buy a tax lien at these tax sale auctions held once a year by the taxing authority. Depending upon your operating jurisdiction, there may be several types of auction bidding. Sometimes, not all Tax Liens are sold at the auction. This could be because of either a lack of bidding or because there were no acceptable bids. In this type of scenario, the Tax Lien can be purchased over the counter at a later date.

Invest in Tax Lien Certificates and Tax Deeds Tax Free

Did you know that you could use money from a self-directed IRA account to invest in tax lien certificates or tax deeds? I’ve interviewed retirement account specialists from two different self-directed IRA companies; EntrustCAMA and Equity Trust Company, and I’ve learned that it is possible to invest tax free in tax lien certificates and tax deeds with a self-directed IRA.

If you use money from a regular self-directed IRA account to invest in tax lien certificates or tax deeds, than your money grows tax free until you withdraw from your account after retirement. But, if you use money from a Roth self-directed IRA, and you do not take any withdrawals until retirement age – you do not pay any taxes on your profits! So if you are using tax lien or tax deed investing as a way to save for your retirement, you need to look into this.