How To Buy Government Tax Lien Property

If you would like to invest in real estate, and are looking for a way to purchase a home at less than market value, one low-cost way to start purchasing property is to buy government tax lien property.

Whenever a real estate owner fails to pay real estate taxes owed the city government, the government is entitled to place what is called a tax lien on their property.  The government then conducts an auction of all tax lien properties in a given area and the highest bidder gets to take possession of the property, so long as they take responsibility for paying the back-owed real estate taxes.

Contact the office of your local county tax collector to find out where to obtain a list of tax lien properties or when they anticipate holding the next auction of tax lien properties.  Sometimes you can find out this information online or in the classified section of your local newspaper.

Every county government has its own rules when it comes to bidding on and purchasing tax lien properties.  You may have to attend the auction in person at a specific time and place and be ready to pay cash or put down a cashier's check as a good faith deposit in order to participate in the auction. Find out the rules ahead of time so you can be prepared and not miss out on a great deal.

The owner of the house has one year from the auction date to reimburse you for the back taxes, otherwise, the title of the house will pass on to you.  The attraction of bidding on and buying government tax lien properties is that you can often obtain a home by paying much less than market value.  You must, however, be willing to play a waiting game, because you cannot rent out the house, evict any tenants, or renovate the property in any way until that one-year deadline from the auction has passed.

Buying a government tax lien property is usually most attractive to real estate speculators and investors, rather than first-time home buyers because you often do not take immediate title and possession of the property. You also have to be willing and able to invest your money for up to a year until the title passes to you, and still keep up your expenses where you are currently living. Buying Government tax lien property, however, is a legitimate way to make a better profit in one year's time than money market accounts or stock.


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