American Tax Sale Institute - Tax Delinquent Investing
What Are Tax Sales

Taxes are a necessary part of life. The real estate taxes that property owners pay to the local county government fund vital services. These services include police departments, fire fighters, hospitals, construction, public parks, and other things that make life easier and safer.

But what happens when property owners fail to pay the taxes that the government needs to operate? In that case, the county or municipality must recover these funds so they can function as normal. To recover these delinquent taxes, the government holds “tax sales”.

There are two types of “tax sales” where investors can benefit.

  1. Tax lien sales: where the government sells the right to a lien on the property to an investor.
  2. Tax deed sales: where the government grants full ownership of the property to an investor.

Both tax liens and tax deeds are typically offered at auction. Still, there are very specific differences in tax liens and tax deeds.

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Tax Liens:

Tax lien sales involve the debt on the taxes owed. When you are bidding for a tax lien, you are essentially covering the back taxes of the property owner who has failed to pay their taxes.

Whoever ends up buying the tax lien certificate now has the right to either collect a high interest rate when the property owner does settle the tax bill and pay the outstanding back taxes, or the tax lien certificate holder can foreclose on the property after a certain time period (called a redemption period) and become the owner of the property for just a fraction of the property value – just a few years’ worth of back taxes.

On top of it all, as a tax lien holder your interest is in the first position over all other debts (such as the mortgage), and all other private liens. This means that if the owner pays the back taxes you get paid first; but if he doesn’t pay what he owes, you can foreclose you wipe out all private liens against that property and own it free and clear.

And even if the owner does pay the back taxes off, you still make out well as a tax lien investor because you stand to earn a solid return on investment once the debt if repaid. You can earn up to 36% per year in interest on your investment, depending on the state and all of it backed by the government and the underlying real estate.

Tax Deeds:

In a tax deed sale, the state (represented by the county) auctions off the full ownership in a tax delinquent property to the highest bidder. An investor who wins the tax deed auction effectively becomes the new owner taking full possession free of all private liens and mortgages.

Frequently great deals are available at Tax Deed Sales with properties being awarded to the high bidder at a small fraction of market value, sometimes for as little as the amount owned in back taxes, interest and some fees, and a few other expenses related to the sale.

In both the case of tax liens as well as tax deeds, tax delinquent investors stand to profit. In the case of tax liens, the minimum return on investment is a guaranteed interest rate, the amount of which is depending on the state but usually ranges between 12% and 24% with some states offering as little as 8% and some as high as 36%.

If the tax delinquent owner does not pay the taxes for a certain time, you can take control via foreclosure or by Receiving a “Treasurer’s deed’ for the property to then keep it or sell it for substantial profits.

And if buying a property at Tax Deed sale the investor actually right away owns the real estate and can hold on to it or sell the property. It’s entirely up to you what you do.


And the best part, each and every county in the entire United states has such auctions every year, and many even multiple times a year.

As you can see there is major opportunity in tax sale investing and the American Tax Sale Institute is your trusted resource for the most current and relevant information and training.

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