Your Questions Answered: Subsequent Taxes and Left-Over Liens

This week I received 2 very good questions from subscribers that I wanted to answer for you on this blog so that everyone can benefit from them. And each of these questions is a multi-part question that requires more than just a simple answer. You can read the questions and the answers below.

Question #1:
When he found out that he just missed the tax sales this year in Arizona Eric asked ;
“Can’t I invest in tax liens year around online? Not just in Arizona but in other states? What about the liens that are left after the tax lien sales end, can’t I purchase those?”

Answer:
There are actually 2 parts to this question so I’ll answer it in 2 parts. First, yes there are online tax sales in different states at different times of the year, but there are certain times of the year when there are no tax lien sales online. Tax deed sales are another story since some Florida counties have online deed sales all year long, as often as once a week. But this is not true for liens. Arizona has tax sales in February, there are a couple of Nebraska counties that have their tax sales in March. Florida couties only have their tax lien sales once a year in May, and some Colorado Counties have online tax sales in the fall. These are the only states that have a few counties, not just one or two, that have a substantial amount of properties in their online tax sales. If you would like to find out more about which counties have online tax sales and when they are offered, the Buying Tax Liens Online course comes with a Guide to Online Tax Lien Sales which lists the websites for all of the counties that have online tax sales. The course is updated annually to reflect the new counties each year that have tax sales online. You can get more information about Buying Tax Liens Online at www.BuyingTaxLiensOnline.com.

Secondly, regarding purchasing the left-over liens after the tax sale is over, this is not a strategy that I recommend for new investors. The reason that I don’t recommend it, is that tax sales are so competitive today that if properties do not sell in the tax sale there is usually a pretty good reason why no one bid on them. Purchasing tax liens from this list requires careful due diligence. I just don’t think it’s a good idea unless you’re an experienced tax lien investor. And even then it’s going to require some extra time on your part.

Question #2:
Noah asked, “After you purchase a tax lien there is an obligation as a lien holder to continue to pay taxes on the property moving forward from the purchase of the lien, correct? Moving forward do you acquire a new lien for each tax payment made? I am not looking to acquire properties through tax liens but to obtain a return on cash.? When and if the lien is satisfied do I get back the initial price of the lien plus % and any additional tax monies paid?”

Answer:
In most states you can pay the subsequent taxes. In Florida you don’t get to pay them unless the lien is not redeemed and some counties in Arizona force you to pay them, but in most counties you do not have to pay the subsequent taxes. If you do pay them, you do have to submit an affidavit to the tax collector stating that you paid the subsequent taxes, and they are added to your lien. You are not issued a new tax lien certificate for the sub payments.

As long as you give the tax collector an affidavit for the amount that you paid and get proof of that (I usually have the tax collector send me a stamped or signed copy of my affidavit) then you will get back when the lien redeems your initial investment plus interest and any additional subsequent tax payments that you paid with interest as well.

If you have questions for Joanne you can submit them below or click on the Ask the Tax Lien Lady tab in the menu bar.

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