Tax Deeds
The newspapers are full of news about the US real estate market. Even on German TV, there is a channel, HGTV, since 2019, which reports 24 hours a day about US real estate.
Thus, one can acquire property cheaply through foreclosures or sgn. short sales or make a considerable profit with “house flipping”.
These possibilities actually exist – but without local help, relatively high capital investment and patience it hardly works.
But there are also other possibilities to invest your money in the US real estate market at very good returns, e.g. in Tax Certificates and Tax Deeds.
And exactly on these Tax Certificates and Tax Deeds we have specialized!
In the beginning comes the tax!
Every U.S. property owner receives their property tax bill annually on November 1. These taxes are the main source of revenue for cities and counties.
Among other things, it is used to pay for road construction and maintenance, as well as schools and other public facilities.
If the bill is not paid within the next 6 months, the county registers a so-called Lien (a kind of forced mortgage) on the corresponding object and issues a “Tax Certificate”.
In order to get the missing money, the county has these certificates publicly auctioned.
These auctions have been held for over 200 years and are required by law. Whereas in the past it was necessary to be present in court to place bids and make payments, today this is mostly done online via the Internet. The entire process is handled by the tax authority of the respective district.
R Capital
However, the certificate buyer does not acquire any right to the property, but only to the lien. The purchase itself is documented in the tax file of the property and can usually be viewed online. The Tax Certificate has first priority over other debts on the property, except for tax debts or liens registered by the state (e.g. FBI, IRS etc.).
If the property owner now wishes to sell his property or exempt it from the Lien, the back taxes on the respective Tax Certificate plus interest and other applicable fees must be paid to the owner of the Tax Certificate.
Important:
The interest rate ranges from 16% to 24% and is set by the County!
If the Lien is not paid off after one year, the interest rate can increase up to 50%. It can happen that there are several certificates for one object. In case of non-payment, the owner of the oldest certificate usually applies for the realization of the property (Tax Deed Application).
R Capital
A Tax Certificate must be bought back within 2 years, otherwise the holder of the certificate has the right to apply for the auction of the property. Tax Certificates are therefore suitable for an investment period of max. 2-3 years.
In contrast to the Tax Certification Auction, the ownership of an object is transferred in a Tax Deed Sale/Auction. The buyer acquires the property with all rights and obligations. The county issues a deed on the acquisition. This documents the transfer of ownership.
The property can now (with restrictions!) be encumbered, rented, sold or used by the buyer. Apart from the purchase price, there are no other costs such as land transfer tax or other fees.
Do you still have questions about how Tax Deeds work? Are you interested in attending such an auction live?
Simply use our contact form to make an appointment for an auction and see live how profits are made with US Deeds or call us at +1-786-460-8863!
