Your Money. Personal Finance. Your Practice. Popular Courses. Part Of. Getting Ready to Sell. Selling Strategies. Real Estate Agents. The Owner-Seller Option. The Selling Process. Tax Consequences. Definitions A-O. Definitions P-Z. Personal Finance Taxes. Table of Contents Expand. What Is a Tax Deed? Understanding a Tax Deed. What Is a Tax Deed Sale? Special Considerations.
Tax Deeds vs. Tax Liens. Example of a Tax Deed Sale. Key Takeaways A tax deed grants ownership of a property to a government body when the owner fails to pay the associated property taxes. Tax deeds are sold to the highest bidder at auction for a minimum bid of the outstanding taxes plus interest and the costs associated with the sale. Successful bidders have a minimum amount of time to pay for the purchase—usually 48 to 72 hours.
Property owners may file a claim to receive any amount paid to the municipality in excess of the property taxes plus interest. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
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Investopedia does not include all offers available in the marketplace. Related Terms Grant Deed A grant deed is a legal document used to transfer ownership of real property. What is a Tax Lien Certificate? Only some states allow tax deed sales. Others only allow tax lien sales. Some operate a hybrid system combining both approaches. Successful tax deed investing requires knowing local laws and procedures as well as local real estate markets. These complications and the risks keep many inexperienced real estate investors out of tax deed investing.
Properties wind up at tax deed auctions, because the owners did not pay property taxes. After a period of time that varies according to jurisdiction, the taxing authorities can place a tax lien on the property.
After further time, the government can foreclose on the property and auction it. Local governments post lists of foreclosed properties before the sales. Investors can obtain these lists, research the properties and decide where to submit bids. Auctions are often held online but may also be offline and require bidders to be present. Auctioneers typically set a minimum bid of the total of unpaid taxes, penalties and interest.
Sometimes the minimum bid is set as a percentage of the market value. The winning bidders are expected to place a down payment at the time of the auction. Then they pay the rest in cash, often within 24 hours but in some jurisdictions up to a few weeks later. In all cases the sale of property at a tax deed auction or sale is regulated by State law and administered at the local level.
The end result is that when investing in tax deeds you get the property at a cost of the unpaid taxes and fees plus any additional amount that may be bid at auction. Tax deed investing may result in buying the tax deed well below market value, sometimes for just pennies on the dollar.
Investing in tax deeds is available to foreign investors, from Canada, Europe, anywhere in the world. The business of tax deed investing requires a little more involvement on the part of the investor than tax lien investments. In the case of tax deed investing you will own the property if you are the high bidder at a tax deed auction. Various strategies can be used when investing in tax deeds: for example;. Ted Thomas began teaching and guiding new tax deed investors the secrets to successful tax deed investing over 25 years ago.
What Is a Tax Deed? Various strategies can be used when investing in tax deeds: for example; A strategy of buying properties, usually residential homes that can be quickly sold for a profit.
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