The Positive Impacts of the Tax Lien System

Local Governments depend on property taxes for funding of the critical services we all rely on like public schools, road maintenance, public safety and healthcare, to just name a few.

So what happens to a community and its services when property taxes go unpaid? Well you wont be surprised to learn that delinquent property taxes impede the provision of important government services and the local government’s fiscal health declines.

So how is this degradation in service provision prevented? Many governments use the sale of tax liens to reclaim this missing revenue and ensure continuation of service provision to their citizens.

But unfortunately, tax liens sales have a negative reputation based on the misconception that they cause homeowners to lose their property to greedy investors.   This is not true. The vast majority of homeowners are forced into action to redeem the lien by payment of back taxes. With some minor inconvenience to the homeowner, everybody wins – the government collects enough tax dollars with which to fund public services, and the homeowner keeps their homes thus stabilizing neighborhoods.

Cities like New Orleans who have aggressive tax collection efforts prove highly successful at recovering taxpayer dollars and raising revenue to go toward resident’s top priorities.

New York City is a shining example of a successful tax lien system. Since implementing a lax lien securitization system they have secured a collection rate of almost 99 percent!

Only properties that are not redeemed are sold to new owners by way of a tax deed sale, and in most cases the new owners will improve the homes and pay the property taxes in a timely fashion.

Overall tax deed investors help eliminate community blight by reclaiming and improving vacant or dilapidated properties and paying back the delinquent tax revenue the local government needs to improve crucial public services like schools and hospitals.

We encourage you to do some research into the way your local government handles their tax lien sale process and to request information on how to get involved if you are interested in becoming a tax deed investor yourself.

March 20, 2017

Posted In: Auctions, Investing, Tax, Tax-Deed

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Upcoming Networking Events for Tax Deed and Tax Lien Investors

Networking is a vital component in growing your tax lien and deed business for experienced investors and beginners alike. A large industry event like the National Tax Lien Association Annual Conference is a networking event where investors get the opportunity to interact with leading industry experts and receive information about vendors and services.

If you are new to tax lien and deed investing, educational events such as live training classes or webinars are excellent ways to consume knowledge that will help kick start your business in the right direction.

If you live in the Broward County Florida area, good news! Our friend and highly experienced tax lien and deed investor, Richard Meyer, is holding an all-day educational event at the Holiday Inn at Sheridan and I-95 in Hollywood Florida, Saturday, March 12, 2016. With his 20+ years of experience in the business, Richard has acquired an abundance of knowledge on both tax lien and deed investing and he wants to share his knowledge with others interested in doing the same!

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Richard will be describing in detail the five ways you can profitably work tax certificates and tax deeds without any money. Rich will explain how to make money using just your own hard work and guile. If you are looking to grow in your tax deed/lien investing business, you should not miss this opportunity to learn from a highly successful industry expert! Cleartosell will also be manning a booth at the afternoon session and be on hand for any questions about our unique services to tax deed investors. We hope to see you there! You can find out more information about the event by contacting Jordan Oates at Oates.JL@outlook.com or Richard at RMeyer219@gmail.com.

If you don’t live in the area and cannot attend these events, no worries! There are networking and educational events such as these happening all over. Be sure to research what’s happening in your area so you don’t miss out on opportunities to network and build valuable knowledge for expanding your business.

February 17, 2016

Posted In: Tax, Tax-Deed


Invest In Tax Lien Certificates & Tax Deeds Using A Self Directed IRA

Self directed Individual Retirement Accounts are best known for offering a range of assets that can give them the best returns. This flexibility allows the account holder to diversify their retirement portfolio. Here’s the good news, tax lien certificates and tax deeds are among the types of real estate investments to choose from, so the impressive returns achieved on these assets can be realized in your IRA—effectively tax-free!

Using a self directed IRA to invest in tax lien certificates is a simple and quick way to make tax free retirement income. If you are familiar with the nature of tax liens, you know that they are usually redeemed quickly and income is gained by the interest rate you charge the property owner until the lien is satisfied. Since payments flow directly into your IRA account, all funds through redemption are tax deferred and available to use on your next investment of choice.

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Tax deeds require considerably more effort and money than tax lien certificates because you take ownership of the property, but can be a great source of retirement income if bought through an IRA. The advantage to buying and selling real estate via this route is that all gains from the sell are generally tax-free. Whereas the gains through purchasing real estate with personal funds would be subject to capital gain tax.

Whether you rehab the property, sell it outright, or rent it; all expenses MUST be paid by the IRA and all revenue from selling or rent MUST go back into the IRA; the use of any personal funds is strictly prohibited. The same rule applies to all expenses involved in clearing up a title on a tax-deeded property by using a certification service like Cleartosell. It is imperative to carefully plan before investing and be sure enough money is in your account to cover maintenance, taxes, attorney’s fees, or any other emergency expense that might occur.

There are very specific and strict rules involved when using a self-directed IRA to buy real estate. It is well advised to conduct thorough research and seek professional counsel before diving in. Consult with a self directed IRA custodian such as Equity Trust, Pensco Trust Company, or IRA Resources, Inc for more information on using your IRA to invest in tax deed and liens.

December 7, 2015

Posted In: Tax, Tax-Deed


Florida Tax Deeds vs. Foreclosures: Why Tax Deeds Are Less Risky Investments

Foreclosure sales and Tax Deed sales possess procedural similarities, but vary among states depending on whether they are a judicial state or not. In Florida, the statutes that protect a tax deed purchaser make for a more secure investment than the risky and sensitive foreclosure sale process in Florida.

With a foreclosure sale, an interested party can challenge the sale on any procedural ground, and sales are often reversed. The investor must carry out thorough investigation of the foreclosure sale process to make sure all procedures were followed in strict compliance, which can quickly get expensive. If just one mistake was made, the sale poses high risk of being undone. In addition, a title policy will be denied on a property if every interested party was not personally served notice. If a party cannot be found to serve by hand, and instead notice is published to extinguish interest, that property will not qualify for a title policy. In addition, as if it couldn’t get any more risky, a purchaser of a foreclosure is jointly and severally responsible as the previous owner for all unpaid Homeowner or Condo association assessments up to the transfer of title.

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Tax deed purchasers, on the contrary, can rest easy knowing that Florida statutes are on their side. In a previous blog post, we discussed the statutes that protect a tax deed purchaser from owing any money to the HOA or condo associations for assessments made prior the tax deed sale. As long as each party receives notice, their interest is wiped out by the issuance of the tax deed. If an interested party were to contest the sale, it would have to be worth them potentially losing substantial amounts of money. If successfully overturned, not only will the contesting party have to pay the full amount the bidder paid at auction, plus interest, but all bidder’s attorney fees, as well as any improvements that have been made to the property since the sale.

A quiet title action will extinguish any redemption rights, but the length of time involved to complete a quiet title is not a practical option for regular investors who want to turn around their profits quickly. A second, much faster alternative to quiet title is the tax deed certification service that Cleartosell provides. If we find that the tax sale was executed properly, according to Florida statutes, then we will certify that an investor can proceed to closing with a policy and convey the property via a warranty deed. With our average certification turnaround time currently at 17 business days, investors no longer have to wait months to sell a tax deed property at full fair market value. You will see there are great advantages to investing in Florida tax deeds over foreclosures due to the safeguards the Florida statutes provide to the tax deed investor.

If you would like to speak with our experienced real estate attorneys about your tax deed investments, Click here to schedule an appointment for a complimentary attorney consult.

November 4, 2015

Posted In: Foreclosures, Tax, Tax-Deed


What chance for real tax-lien reform?

pic51With control of both houses effectively in the hands of the Republicans, cleartosell.com looked for signs of an appetite for reform to the 100+-year old principles behind tax liens and the foreclosure that can follow.

There is little clarity on any tax reforms that the Republicans plan beyond wanting people to keep more of what they earn whilst recognizing the deficits that need to be met by taxation income. So it looks like a continuance of the dilemma of modern politics.

Although you would think that a Republican controlled legislature would move to streamline the real property tax collection process, we are mindful of the Democratic controlled White House. Even if there is a change of control of the White House in two years, we discovered a couple of instances of blustering over the morality of the tax lien laws that may impact any real change:

Firstly, just over a year ago, The Washington Post reported on changes that Democratic Mayor Vincent C. Gray had made to the tax lien process to protect people from loosing their homes over trivial tax debts. The changes did not reduce the liability of the homeowner to pay the back taxes and additions, but it did remove the opportunity for investors to take ownership.

And secondly, in 2012 The American Bar Association published, through its BiFocal Journal gave a damning account of how seniors and the disabled are at unacceptable risk of loosing their homes through tax deed foreclosure.

From what we can see, these are isolated protests that are not indicative of change that would negatively affect investors. But the early stages of a moral revolt against the tax lien system cannot be denied.

So for now, we can conclude that the landscape for tax liens and foreclosure will remain without change, but we will keep watching and report any proposals we find.

November 14, 2014

Posted In: Tax


Will you play hold or raise with your tax deed investments?

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Many tax deed investors buy with the intention of holding their investment for four years in the hope there are no challenges to their title. If after the statutory period they have clear title then their options open up to refinance or sell on. But there are alternatives to holding property for four years that can represent a significant raise in your investment game.

Whether you are a serial investor who has built up a portfolio of tax deed properties that you are holding, or just have one property, you carry all the risks. That risk is in the day-to-day costs and expense in owning the homes including maintenance, repair and replacement, taxes, windstorm insurance, HOA dues, rental difficulties and on top of that you are betting on volatile market conditions to preserve the capital in your investment.

If you can quickly and efficiently clean the title of your tax deed properties you create the opportunity to release your capital to reinvest and, crucially, know that your title is secure and unchallengeable.

With a clean title you certainly have the option to sell on your investment property. But what about the refinance route? With clean title, you can refinance your investment at the current historically low rates, not only releasing the capital you used to buy the property, but also to release the cash you have tied up in rehab work. After refinance you get to keep the property in your portfolio if that is what you wish AND are back in funds to buy more.

By working with cleartosell.com to access our innovative, time saving and cost effective systems that determine the clarity of title in 20 days, in just a month from now you can be ready to release your capital and raise your investing game.

October 22, 2014

Posted In: Tax, Tax-Deed