State Tax Lien Sales

Tax Sales: Why State Tax Lien Sales Are Preferable To State Tax Lien Deed Sales.

State tax lien sales offer a win-win-win solution to everyone involved in the lien process. States, investors, and taxpayers all benefit from this type of sale. State tax lien sales help states recover tax money they rely on to pay their debts. Investors find state tax lien sales offer a way to safely make a profit. They can make a profit in one of two ways. First, they get the interest paid on the debt they have paid for the taxpayer, once the debt has been redeemed. The second way is through foreclosure if the taxpayer fails to repay the debt.

The investor may make bids in person, online, or through the mail, depending on the state's requirements. However, winning bidders of state tax lien sales need to ensure all taxes are paid throughout the entire taxpayer redemption period in order to keep the property free of other liens in case foreclosure occurs. They also need to be aware of any bankruptcy proceedings the taxpayer files during the redemption period. Although state tax lien sales provide a lucrative market to investors, they also are better for the taxpayers who wish to retain their property. In tax deed sales, the property is auctioned off, and the owner may or may not have a chance of redeeming it. In state tax lien sales, only the lien is sold.

The taxpayer then has a specific amount of time to repay the debt. Usually, this is anywhere from one to five years, depending on the state laws. Thus, state tax lien sales offer a good solution to an otherwise unfortunate situation. However, not all states offer state tax lien sales. These states go straight for tax lien deed sales, and auction off the actual property in order to recover overdue taxes. This type of sale also offers lucrative profits to investors, but the taxpayer ends up losing everything.