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To answer the question: "What are tax lien certificates?" the first step is to explain a tax lien. Local governments (county, city, township, town, parish) receive most of their operating funds from property taxes. When property taxes go unpaid the local government's method to enforce payment of those taxes is to place a tax lien on the property. A tax lien is the legal documentation defining a debt the property owner has to pay the government past due property taxes. So the local government has the money it needs to operate it sells those tax liens in the form of tax lien certificates to investors.
Tax lien certificate investors are rewarded for their investment with an interest rate defined in state law that can pay interest rates of 16 %, 18 % 36 %. They are most often purchased at annual government auctions, but can sometimes be purchased from local governments without an auction. What are tax lien certificates and some of the advantages of investing in them? Investing in tax lien certificates is one of the safest, predictable and secure investments you can make. Here are some unique features about tax lien certificate investments that benefit the investor:.
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