Answers To Questions About Florida Tax Liens

Posted on May 2, 2012 by Joanne

With the Florida online tax lien auctions coming up I’m getting a lot of questions about bidding at the online Florida Tax Sales. So here are answers to a couple of frequently asked questions about the Florida tax lien certificates:

Question: Why do investors typically bid down to .25% in Florida?

Answer: Most counties in Florida have a 5% minimum penalty. That means that if you earn less than a 5% on the certificate amount, you get the 5% penalty instead of the interest rate that you bid. So if you bid .25% then you get the 5% penalty instead of .25% per annum on your lien. Also if you bid 10% and the lien redeems in a few days, you get the minimum penalty and not the interest rate. It’s actually a very good thing for the investor.

Question: Can you pay the subsequent taxes in Florida and get the default interest (18%) on your subsequent tax payments?

Answer: No, you do not get to pay the subsequent taxes in Florida. Instead of letting the investor pay the taxes if the owner doesn’t pay them, they just sell the lien each year at the tax sale. However, after the redemption period is over and you apply for the lien to be sold in a deed sale, then you have to redeem any outstanding liens and pay any subsequent taxes and you do get the maximum rate (18%) on everything that you pay if the lien should redeem sometime during the process of going to deed.

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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 "Answers To Questions About Florida Tax Liens"

  • By Joanne May 11, 2012 - 8:30 pm

    Hi Carlos,

    A small penalty can be better than bigger interest rate because the penalty is a flat rate and the interest rate is annuallized.

    Let’s say that you win a bid in a Florida tax sale at 12% – that’s only 1% per month, so if it redeems after a month you only get 1%, but in Florida you would not get the 1% but the minumum 5% penalty. If however it redeemed after 6 months you would get the interest rate and not the penalty, since the interest would come to 6% on your investment.

  • By Carlos May 9, 2012 - 10:55 pm

    Could you explain how can someone earn less than a 5% on the certificate amount?

    Why you get the 5% penalty instead of the interest rate that you bid.?

    Also, how could be a very good thing for an investor that if you bid 10% and the lien redeems in a few days, you get the minimum penalty and not the interest rate?

    Thanks.