Have you ever heard of anyone speak about an issue of a tax lien? You may be wondering what a tax lien is and what it represents to an individual financially. To explain, If you can’t pay a federal tax bill and you also fail to setup a payment plan the government can try to collect the money by issuing a lien on your assets.
To issue a lien means that the government is placing a claim on your assets, be it your house, mortgage, car or even income. An individual can also be issued a tax lien through failure to pay property taxes or other state or local taxes. Tax liens are enforced to ensure that citizens comply with tax rules. Counties, federal and state governments require taxes, and one of the ways to ensure compliance in taxes is through the issue of tax liens on unpaid property.
In purchasing Tax liens, one thing to note is that the immediate purchase of a tax lien does not indicate an immediate ownership of the property. Here are some things to note about purchasing Tax Liens on property.
Most real estate investors go into the business making terrible mistakes. In an attempt to purchase tax liens one lethal mistake investors make is failing to make the right preparations. It is very important to be fully prepared before you attend the tax lien auction. To be fully prepared means that you are checking important details of the list. The first being, making sure to register ahead of time and paying any fees needed for the sale. Reviewing a list of the properties up for auction is important, in looking for a proper guide to the property available.
Financial competence is also important and an often forgotten element of investing in tax liens. If you do not have enough money to purchase a certain tax lien, it might be counter-productive to move on with the investment process.
To learn more about the lethal mistakes real estate investors make, read more on this article by Bankrate