Tax Lien sales differ from state to state DRASTICALLY!
A state like Texas sells Tax Deeds where the buyer purchases and receives the actual property, but other Tax Lien Sales are actually selling the “liens” and not the properties. In these states, a purchaser will not be the owner of the property, but is actually buying the rights to receive the proceeds from the “debt” that the homeowner owes.
If the homeowner does not pay this debt in a specified amount of time, the buyer has the right to foreclose on the property and eventually acquire said property if the owner cannot pay off the debt, but this is not always a foregone conclusion!
The type of sale (Tax Deed, Redeemable Tax Deed or Tax Lien) is not the only difference from state to state. Redemption periods also differ. They differ both in length and in the penalties paid to the tax sale purchaser if the properties are redeemed. These penalties vary GREATLY and make some states much more attractive for tax sales than other states!
Research the details of the state in which you wish to purchase at a tax sale prior to making a bid!
General Tax Lien Sale Questions:
Can a person buy at a tax sale if they do not live in the state in which it is held?
Yes, there is no law preventing you from purchasing at any tax sale. However, you need to consider the cost of research, travel to see properties and travel to upkeep properties in other states. All these will decrease your overall profits.
Which states have the best terms for the purchasers at a tax lien sale or a tax deed sale?
TAX DEED – In 2017, generally, Texas is considered the best state for purchases at a Tax Deed Sale. The deeds are redeemable at a 25% – 50% penalty (depending on when they are redeemed). Georgia is also a good choice as their deeds are redeemable at a 20% penalty (or more depending on when they are redeemed). However, both these circumstances are assuming they are actually redeemed, which may not be the case, so you need to make certain you wish to own the actual property!
TAX LIEN – In 2017, Iowa had the highest return on a tax lien certificate (24%) followed closely by Florida, Connecticut, Illinois, and Wyoming (18%). Again, to invest in these, you need to do your homework. Personally, I know about Texas and Redeemable Tax Deed purchasing – not Tax Liens – so if you want to invest in these, DO YOUR RESEARCH!
Where do I go to get information about other states tax lien and tax deed laws?
Because I am not an expert regarding other states, I cannot and will not endorse any one website, book or program teaching about another state unless I have personal experience with it, but I will be happy to post information that, at first appearance, looks thorough and well thought out. However, always check the credentials of an advisory before acting on that advice, and when necessary, check with a specialized Property Tax Attorney.
STATE – Types of Tax Lien Sales and Websites
TAX LIEN CERTIFICATE STATES:
Alabama
Arizona
Colorado
Connecticut
Florida
Illinois
Indiana
Iowa
Kentucky
Louisiana
Maryland
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New York
Oklahoma
Ohio
Rhode Island
South Carolina
South Dakota
Vermont
District of Columbia
West Virginia
Wyoming
TAX DEED STATES:
Alaska
Arkansas
California
Connecticut
Delaware
Georgia
Hawaii
Idaho
Kansas
Maine
Massachusetts
Michigan
Minnesota
Nevada
New Hampshire
New Mexico
New York
North Carolina
North Dakota
Ohio
Oregon
Pennsylvania
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
