Investors can purchase properties with tax liens from the government at auction. The investor then becomes responsible for collecting the unpaid taxes from the property owner. If done correctly, this can be a very profitable investment strategy. However, some risks are involved, and it is essential to research before buying any properties at tax lien auctions. To buy properties with tax liens, you must first understand what they are and how tax liens work. This blog post will cover the basics of tax liens and how to buy properties with them.

When property owners fail to pay their property taxes, the municipality adds a tax lien to the home. The lien is a legal claim against the property that must be paid off before the homeowner can sell the house or refinance their mortgage. 

While a tax lien may seem like a bad thing, there are benefits for both the buyer and seller when purchasing properties with tax liens. Tax liens offer the buyer an opportunity to buy property at a discount. And for the seller, adding a tax lien to a home can help increase its value by 10-15 percent. 

If you’re interested in purchasing a property with a tax lien, here’s the information the Tax Lien Code has for you.

What is a Tax Lien?

A tax lien is a claim the government makes against a property owner who hasn’t paid their taxes. The lien gives the government the right to seize and sell the property to recoup the unpaid taxes. 

If you’re interested in buying a property with a tax lien, there are a few things you need to know. Tax liens are typically placed on homes and other real estate but can also be placed on personal property such as cars or boats.

Once a property is placed on a tax lien, the owner must pay the outstanding taxes, plus interest and penalties, to remove the lien. If the owner does not reimburse the taxes owed, the government may eventually foreclose on the property and sell it to recoup the unpaid taxes.

How Does a Tax Lien Work? 

  • First, you need to understand that when you purchase a property with a tax lien, you’re not just buying the property itself—you’re also taking on responsibility for paying the unpaid taxes. You could lose the property if you don’t pay the taxes. 
  • Second, you need to research and ensure that the property is worth more than the amount of the outstanding tax debt. Otherwise, you could end up losing money on the deal. 
  • Third, you’ll need cash to pay the tax debt in total—you can’t finance it as part of your mortgage. 
  • Fourth and finally, remember that you’re taking on some risk by buying a property with a tax lien—make sure you’re comfortable with that risk before proceeding. 

How to Purchase a Property with a Tax Lien 

There are two ways to purchase properties with tax liens: At auction or a private sale

Most properties with tax liens are sold at auction. Auctions are typically held online or at the county courthouse where the property is located. To participate in an auction, you’ll need to register as a bidder and put down a deposit. The deposit is usually 10 percent of the purchase price, but it can vary depending on the county. 

You can also purchase properties with tax liens through a private sale. To do this, you’ll need to contact the municipality where the property is located and request a list of properties with tax liens. Once you’ve found a property you’re interested in, you’ll need to submit an offer to the municipality. If your offer is accepted, you’ll be responsible for paying off the outstanding taxes, interest, and associated fees. 

Purchasing properties with tax liens is a great way to start real estate investing. You can buy properties at a discount and earn high returns on your investment if done correctly. By following these tips, you’ll be well on your way to becoming a successful real estate investor.

Risks of Buying Properties with Tax Liens

There are some risks associated with buying properties with tax liens on them. 


One of the most significant risks is that you may need help collecting the total unpaid taxes from the property owner. This is due to several factors, such as the owner’s financial situation or ability to sell the property. 


Another risk is that the government may foreclose on the property before you can collect the unpaid taxes, which could result in you losing your entire investment.  


Properties with tax liens may need significant repairs, costing more than you anticipated.  

It is, therefore, important to carefully research any properties you are considering purchasing at a tax lien auction so that you are aware of any potential risks involved.

What You Need to Consider Before Investing in Properties with Tax Liens 

Before you invest in a property with a tax lien, there are a few things you need to take into consideration. Here are some of the critical points you need to keep in mind: 

The amount of the outstanding tax bill: 

You’ll want to ensure that you have an accurate estimate of the amount of money owed in taxes. The last thing you want is to be surprised by a large tax bill you weren’t expecting. 

The interest rate: 

The interest rate on tax liens can vary depending on the state in which the property is located. You’ll want to research the interest rates in the state where you’re interested in investing so that you can factor it into your decision. 

The redemption period: 

The redemption period is when the property owner has to pay the outstanding taxes. In most cases, this period is between 1 and 3 years. However, it’s essential to check with your state’s laws to be sure. 

Your exit strategy: 

It’s also essential to have an exit strategy in mind before you invest. What do you plan on doing with the property once you’ve paid off the outstanding taxes? Will you sell it, rent it out, or keep it as an investment? Knowing your exit strategy ahead of time will help you make a more informed decision about whether or not investing in a particular property is right for you. 


So there you have it—the basics of how to buy properties with tax liens. We hope this blog post has been informative and helpful!

Purchasing properties with tax liens is an excellent way for new investors to start real estate investing because they can buy homes at discounts and potentially make high returns on their investments if done correctly! If you’re interested in buying such property, remember that there are two ways to go about it—at auction or through private sale—and do your research beforehand by determining market value and factoring in all associated costs! With careful consideration and execution, buying properties with tax lies could be highly lucrative for new investors!

Thanks for reading!