Tax Lien IRA: Certificates, Deeds, and More!

Tax Lien IRA

In a recent article, American IRA introduced the excellent investment potential inherent in a tax lien IRA, so today we’d like to go into even more detail about an asset that many consider both one of the safest and most profitable. Very few investments can claim such a powerful distinction.

Finding the Right Tax Lien

Your first step to mastering tax liens starts with deter
mining where they’re sold. A number of counties and states offer tax lien certificates, but some only offer tax lien deeds – which are a completely different type of investment. After this, you’ll need to assess the available properties to determine their profitability and then possibly bid at an auction. Local or state governments decide on the initial interest rate at auctions ranging from 12% to 50%.

Holding a Tax Lien IRA

Owning a tax lien in a self-directed IRA can be remarkably simple: most of the time, you’ll simply wait until the delinquent taxes are paid, but if they aren’t  in some states, you’ll receive the first right of refusal for the next year’s unpaid taxes. In other states, it will go to auction and you will have the option to bid. If the taxpayer does not pay the outstanding tax lien for a period of years, depending on the state, you can then take possession of the property via foreclosure, possibly resulting in exceptional returns.

Tax Lien Certificates and Deeds

There are two different kinds of tax liens, including certificates and deeds. Certificates offer delinquent homeowners one final chance to retain ownership over their property while using investment money from a 3rd party, an investor, to push out their due date. The investor loans this money to the county and receives interest in return (unless it’s left unpaid, usually resulting in a foreclosure).

A tax deed involves bidding or buying the entire property at auction with no further payment extension or interest. Some states have a right of redemption on a tax deed sale, check with your state.

When investing in tax liens and tax sales, it is important for the investor to do their due diligence in the same way they would if they were purchasing the property.

If you have any questions about opening a new account, contact us at 1-866-7500-IRA(472) or [email protected]. If you’d like to transfer a Tax Lien IRA, contact us at 1-866-7500-IRA(472) or [email protected] or click here for more information.

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