Last month I went to a couple of tax sales in New Jersey and bought a handful of tax lien certificates. You may think that all you have to do to invest in tax liens is go to the auction and buy some liens, then sit back and wait for them to redeem, but that is not how it works. In a lot of the states the tax collector does do all the heavy lifting – notifying home owners that a tax lien has been sold on their property and collecting the delinquent tax payments with penalties and interest and handing it all over to you when the lien redeems. But there is actually a little more to it than that. In states like New Jersey that actually issue tax lien certificates to the investor, you need to record the certificate with the county clerk. And although you don’t have to pay the subsequent taxes, it certainly is in your best interest to do so.
What Are Subsequent Taxes? Continue reading