Investing In Tax Liens From Overseas

Posted on January 17, 2011 by Joanne

I recently got this questions from a subscriber in New Zealand about investing in tax liens from overseas.

“Hi Joanne, I’m a foreigner who resides in New Zealand, what’s the fastest way for me to get a tax ID # so I can participate in the U.S. tax sales.”

As you may know the Arizona tax sales are coming up and some of them are online sales. If you are a foreign investor who wants to participate in these sales, this is the time to get ready. If you wait too long you won’t be able to participate in these tax sales this year.

There are 2 things that you need to have to have to participate in these online tax sales. You need a U.S. bank account and a U.S. tax ID number. Ten years ago it wasn’t so difficult to get an Individual Tax Identification Number (ITIN) from the IRS. But with everything that has happened since 9-11, it’s gotten a little more complicated. Now in order to get an ITIN number, you first have to have a U.S. business so that you can get an Employer Identification Number (EIN). And then you can apply for an ITIN number.

The best way to do this is to set up a U.S. LLC, have the LLC apply for an EIN number and then your LLC must file a tax return and then you can apply for an ITIN number. Once you have a U.S. LLC and EIN number, your business will be able to open a U.S. bank account. I know it sounds complicated but once you have the EIN number, which should not take long to get, you can start investing in U.S. tax liens.

There is one thing that I would like to caution you about though. Many investors have heard of the double digit returns possible with tax liens and they expect that when they participate in the online sales. But the online sales are heavily attended because anyone with a computer, a tax ID #, and a U.S. bank account, may bid at these tax sales. When new investors bid too high at these tax sales they don’t get any liens. Do not expect to get double digit returns at the online tax sales. Returns of 5% – 7% at these sales are more realistic. Double digit returns are possible put not likely.

Have Questions or comments? Leave them below.

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About Joanne

Joanne Musa is known online as the Tax Lien Lady. She helps people who want to invest their money profitably in tax liens and tax deeds and get high returns on their money without the typical risks of real estate investing or the uncertainty of the stock market. Get your free special report on "7 Steps to Building Your Profitable Tax Lien Portfolio" by Clicking Here.
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2 Responses to "Investing In Tax Liens From Overseas"

  • By CJ April 11, 2012 - 9:53 pm

    Hi,

    Which type of business entity is best suited for investing in Tax Liens (ie LLC, Corp, etc), in primary respect to TAX CONSEQUENCES. I have been told that an LLC is probably the best idea. Is that true? Again, I want to maximize the investment income, therefore, concerned about the TAX IMPLICATIONS. Would you also know how much fees are required yearly to maintain the LLC in NJ?

    Thanks.

    • By Joanne April 15, 2012 - 10:28 pm

      Hi CJ,

      this is really a question for your CPA. I am not a CPA and everyone has different circumstances to take into account. One thing to consider is that if you do tax lien investing as a business and you start an LLC for the purpose of tax lien investing, then the interest income that you make could be taxed as regular income instead of interest income. Again something to discus with your CPA as it depends on the volume that you do and probably other things that I am totally unaware of.