Government Auctions - The Investment Differences Between Tax Lien and Tax Deeds

By Leslie Jones

Have you ever considered what the penalty is when a property owner is unable to pay their taxes? Well as you may of guessed the IRS is intolerant and will do whatever is required to retrieve the taxes due, including forcing the buyer to foreclose on their home. On the outside this may seem like a very unpleasant situation, however, there are other sources of alternative financing available to assist this owner. That's where individuals like yourself can profit while providing a possible 'light at the end of the tunnel' for the distraught home owner.

The local government will arrange a tax lien sale, where the public can bid on the right to provide the homeowner a loan in lieu of the home and/or commercial property. In return, the homeowner must pay the winning bidder back the full principle with interest, by a specific date. Both parties must agree with the terms and the date.

If the homeowner fails to pay back the lender, the lender then has every right to foreclose the property and to transfer the title in their name. In order for the homeowner to remain on the title, the owner must keep up with the payments on the new tax lien loan. The lender will charge the homeowner a predetermined interest rate which is much higher then the going mortgage rate in return for saving their home.

Obviously, a savvy business person would like the homeowner to be unable to pay back the loan or default on the loan terms, so that they can receive title on the property themselves. It's in the homeowner's best interest to pay their dues on the home and home tax loan, but if their financial situation was bad in the first place, there's is a chance it may not improve anytime soon in this economy. In many cases, all odds are against the homeowner.

In addition to tax lien sales, there are also tax deed sales. Tax deed sales are when the government auctions off the property and title right away, giving the winning bidder immediate ownership. The current homeowners must surrender their home and/or property immediately. They have no choice otherwise. Tax lien sales will give them a chance to maintain their home, tax deed sales will not.

These government auction tax sale opportunities may be the best investments one can make because you actually have a house and/or property that either you own or have as collateral should your lien interest payments not be made. Just reflect on the amount of money you can make by purchasing a tax lien and charging high interest rates, or paying the defaulted taxes, receiving the house and either renting it for a monthly income or reselling it for a healthy profit. - 23210

About the Author:

To locate websites with the best property tax sale opportunities and receive a free Government Tax Liens Report check out property tax sales or to check out the sites's main page page click government auctions.