Sunday, October 2, 2011

Government Lien Certificates

Posted by Bapak at 10:06 AM

Government Tax Lien Certificates

If a house owner does not pay his taxes by the due date, the government has a legal correct to place a lien (claim) on the delinquent's home as debt for non-tax payment. This legal claim is identified as a government tax lien certificate and can only be developed as soon as a non-payer receives a bill stating the quantity owed and the non-payer does not settle income owed inside of ten days of receiving the bill.

This lien normally leads to one particular of two scenarios the government can auction off the tax lien certificate or they could hold a tax deed sale to traders.

First case illustration would have you the investor bid to acquire a certificate which means you would agree to spend the delinquent taxpayers above due house taxes for him. Once you have bought the certificate you would wait right up until the home owner pays his bill back, when he does spend (98% of delinquent payers do by the way) you will return your tax certificate and obtain your total investment back from the government.

Now here is the aspect all traders are looking for, along with you (certificate holder) obtaining your investment back you will get an interest fee that is determined by the government in advance. This interest fee may possibly be as high as 18 % on up to an astounding 36% depending on what state the tax delinquent home resides in!! This fee is a penalty the government applies to the non-paying property owner when he fails to spend on time and passes it on to the holder of the certificate as interest on the cash you loaned out.

Second case instance involves a stated amount of time would pass without payment and the government could put the home up for bid in the form of a tax deed sale, enabling investors to probably take complete ownership of house for the price of back taxes owed and minor extra fees such as court charges. This might have been wherever the phrase -pennies on the dollar- was coined.

What every serious tax lien investor is searching for (and it does not usually take place) is the massive hit in which your return could be a 1000% on your money. I think you are ready to see why  tax lien certificates investing can be profitable but that is only aspect of why they are very possibly the soundest investing opportunity found these days, the other part is how secure an investment they are.

The great thing about these certificates is they are backed by the house they are attached to. The house owner realizes if he does not spend his taxes on time he will incur a serious penalty, now that most of the time motivates one particular to spend, but if taxes nonetheless are not paid the government can seize house. No one particular would like to eliminate their property so they finish up paying the late taxes and the late charge practically 100% of the time guaranteeing a certificate holder will earn a return on their investment that will be hard to beat.

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