Tax Sales

Financial Ex1.jpg

One of the biggest challenges facing seniors today are low interest rates and the effect they have on maintaining the value of retirement income and what it can purchase.  It is obvious that if you are only earning 2% - 5% on CD's or Annuities that your money is not keeping up with rising prices and will buy you less and less over time.  Investment guru's tell you that you must take more risk to earn higher returns and not everyone is in the position to take on more risk. Tax sales, including Tax Liens and Tax Deeds may provide a safe alternative.  The experts at New Dawn Financial purchase Tax Liens and Tax Deeds and they can help you determine if this is an appropriate alternative for you.   

A Tax Lien Certificate is a first position lien on real estate due to delinquent property taxes. Once property taxes on a property are one year delinquent, the county government offers to sell a tax lien certificate on the property. Tax lien certificates pay fixed rates of returns of 8% to 36% interest per year depending on which county you’re investing in.  The price of the tax lien certificate is the amount of one years back taxes and penalties, and therefore can range in price from under $100, to hundreds of thousands of dollars. 

Tax Lien Certificates fall under property tax law, and are therefore enforced and governed by state law.  The tax lien certificate investment is secured by the property, similar to a mortgage, except by law, a tax lien certificate takes priority over a mortgage. Because property taxes are a small fraction of the value of the property (less than 2%), the tax lien certificate investment is typically secured by property on at least a 50 to 1 basis. To put this in perspective, banks only secure your deposits dollar for dollar or 1 to 1. 

About half the states in the United States offer Tax Lien Certificates, and the other half offer Tax Deeds. Both systems offer very lucrative investment opportunities for the informed investor. Both are means of collecting delinquent property taxes, putting properties back on the tax roll, and generating revenue to the county for schools, police departments, roads, hospitals, fire departments, and libraries.  One is not necessarily more advantageous, lucrative, or preferred over the other. The two systems are simply different; both have their advantages, and both are lucrative in their own way.