What Are Government Tax Lien Sales All About?
Government tax lien sales aren't just for high-rolling investors (although the
profitability of buying at government auction is tremendous). Many of today's
government tax sale buyers are regular ordinary folk looking to find a bargain.
- and bargains they find!
You see the ads all of the time: Brand news cars for $100; boats for $50; RV's
for $250; even houses for as little as $10,000 Are these claims too good to
be true? Not in the world of government tax lien sales! No matter what big-ticket
items you're looking to buy, the odds are the government has it - for a fraction
of the cost of buying it new.
How does the government find all this great stuff, and why can they sell it
so cheaply? The answer is simple: the government isn't out to make a profit,
or even sell the items at their current value. All they want to do is recoup
lost tax revenue.
Taxes are the government's way of paying for community services such as new
roads and highways, public schools, emergency services, and more. When taxpayers
become delinquent on personal income tax bills and real estate taxes, the government
doesn't have the money it needs to provide these services. In order to recoup
their losses, they have the legal right to lien (or take ownership), of the
taxpayer's personal property and/or real estate holdings and sell it for proft.
Local and state taxing authorities can only lien the property in which the
tax is due. The federal government, however, has a lot more leeway, and can
take over any and all personal property of worth including cars, trucks, boats,
RV's, timeshares, vacation homes, primary residences, jewelry, and more, for
the amount due on the delinquent tax bill. The feds can not only lien a taxpayer's
current property, but any additional property he may acquire before the tax
debt is paid in full and the lien released by authorities.
Once a taxpayer's personal property and real estate has been liened, the government
may next offer these items at auction to redeem their lost revenue. In the case
of smaller items such as boats, cars, and the like, the auction is usually held
in a more traditional bidding manner, with buyers bidding against ach other
for title ownership of the item.
Property sales may be handled a bit differently. Although some deed sales do
offer outright sale of the property, the most common tax lien sale of property
is in the form of a tax lien certificate. This allows the taxpayer a little
more time to pay their debt by allowing a third party investor to pay off the
government tax debt for the delinquent taxpayer, with the promise of recouping
their investment - with interest - in a set period of time.
In the event the property owner fails to pay the debt in full by the deadlines,
title of the property is transferred to the lien certificate holder for the
price paid for the taxes. This type of sale can yield extremely high dividends
- sometimes as high as 300% -- if the investor takes ownership of the property
and then sells it on the open real estate market for its full value. Keep in
mind when bidding at a government auction that all sales are final, with little
or no property inspections permitted before the sale.
Whether you are looking for a new car or a vacation home, government lien sales
can be an excellent opportunity to purchase the personal property or real estate
you might not otherwise be able to afford.
For a complete listing of government tax lien sales and auctions near you check
out www.irs.com , or purchase a sate-by-state listing at a variety of websites
available.
Irs Tax Liens
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