Tax Foreclosure Properties

In any business of trading, the success formula is “Buy low and sell high”. This is squarely applicable in Real Estate business also, which is all about buying and selling properties. This is the only business where thousands of dollars exchange hands in a single transaction and therefore the profit or gain should also be not in hundreds, but in thousands of dollars. For Real Estate investors, which activity can bring forth enormous profits? Well – the answer is Tax foreclosure properties.

Tax foreclosure properties are those confiscated by the Government for delinquency in payment of the taxes due to the Government. This will include the taxes due to Federal Government – personal taxes like Income Tax – where the Internal Revenue Service (IRS) is empowered to take action on the delinquent tax payers, seize the property and sell them off by public auction. For real estate taxes like the property tax, the local counties through their collection officials can record the tax dues at the County Record office and initiate foreclosure action to sell of the properties through public auction. In fact Tax Lien foreclosures get priority over the mortgage lenders’ foreclosures.

It is at this stage the investors can enter into the deal for buying properties of Tax foreclosure. The crux of the deal is to pay off the tax dues to the Government and own the property. This can be done in two ways according to the State laws – 1) entering the public auction by bids and get the right of ownership by highest bidding and 2) purchasing the Tax Lien certificates as provided by some States, pay off the amount mentioned therein to the Government and recover the same from the home owner with interest, within a particular period, failing which own the property themselves.

First the investors should select the property, which is delinquent on payment of taxes and come up for Tax foreclosure sales. This can be done online, as many County offices have their own websites, where these tax-delinquent properties are listed. Complete details of the proposed property can be gathered by contacting the County Clerk or the person nominated for this purpose. Generally these Government collection agencies will be keen on converting these properties into hard cash, to collect the tax dues and so any purchase enquiry will be gladly welcome.

Similarly, IRS authorities are releasing the details of Tax foreclosure public auctions at their site with fullest details possible, the date of auction, minimum bid, and overview of properties with photos, if available. They also nominate the person to be contacted, where the investors can get whatever details they want about the proposed properties, such as any other liens, mortgages etc.

If proper care is taken in selecting the properties, in prime locations, there can not be anything more profitable than the Tax foreclosure properties. What the investors are going to pay is only the tax dues on the said properties with interest, which can never be the real value of the property, but can only be a fraction thereof. Only because of the delinquencies in paying the Government tax dues they are there for sale. As such good and formidable properties such as single family homes, multi-residence candos as also acres of vacant land can be bought at a throw-away price, if the investors are careful in their selection. The price at which these properties can be bought, gives scope for any rehabs, fixer upper or face lift needed to be done, for selling the property with high margins or renting them for a permanent monthly rental income.

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