What is a Tax Lien Foreclosure?
A tax lien foreclosure occurs when a taxing authority seizes a piece of property after the property owner has failed to pay property taxes due.
How Does a Tax Lien Foreclosure Work?
Let's assume that John owns a house in the country and the annual property taxes are $4,000. John has fallen on hard times, and he's been unable to pay his property taxes. Accordingly, the county files a lien on his property for the unpaid taxes. The lien is represented by a tax lien certificate.
When a tax lien is placed on a property, the property owner cannot sell or transfer the property until the taxes are paid. And if the taxes are outstanding long enough, the taxing authority can even seize the property via a tax lien foreclosure and sell it to recover the unpaid taxes.
Why Does a Tax Lien Foreclosure Matter?
Taxing authorities are always anxious to get their money. That's why they're often willing to sell tax lien certificates (sometimes called tax deeds) to other people. Tax lien certificates accrue interest at a set rate, making them an interesting investment for certain people. Such investments are considered solid since they are tied to a hard asset (i.e. real estate).
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Most people think there is some sort of voodoo magic that goes into creating a loan...Read More →
The best credit card balance transfers can not only save you interest but can also help you pay off your debt faster. Although they aren’t the only solution to reduce balances, these balance...Read More →