Tax Lien Certificates-What Are They?
Before you understand tax lien certificates you must understand all real estate is taxed by the county and municipal governments.
Taxes are collected by these municipalities for various different programs such as schools, roads and infrastructure. Basically these taxes are used for the good of the general citizen living in that particular area of the country.
The way these municipalities make their money to pay for schools, police and fire departments is with revenue received via property tax.
In many states, if the property owner does not pay the property taxes the county or municipality will accrue the taxes and penalties for many years.
If the property owner does not pay their taxes the county or municipality will sell or auction the property at a tax sale or tax auction.
Counties issue tax lien certificates which are sold at auction in many states.
These tax lien certificates allow the counties to collect the tax revenue they need to continue running the government now rather than wait for the property to be auctioned off later in the year. Its a quicker way to get their money.
In realaity the county sells a tax lien certificate that is nothing more than a piece of paper that shows taxes due on a property.
This allows the investor to pay the taxes which helps the government get their money now rather than waiting and gives the investor a low risk high yield interest rate which could be from 10%-50%
Click the link to learn more about tax lien certificates.
