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What is tax certificate

what is tax certificate

What Are Tax Certificates?

November 22, 2013

Of all the ways to invest, one that is always overlooked by every investment broker is tax lien certificates. This is one way to make money off of the tax system and possibly gain land. This is also one of those methods that few people get into because there is some risk not associated with other forms of investing.

What are they?

When homeowners are delinquent on paying taxes, some states allow the counties to sell a certificate in the amount owed. If the homeowner is able to come up with the money, then they pay the amount back with a 15 to 50 percent interest attached. The county then pays this to the certificate holder. If the homeowner is unable to come up with the back taxes, then the person who owns the first certificate on the property becomes the owner and are given a tax deed. The only drawback to this is if the property needs quite a bit of work or is on a piece of property that has issues, such as flooding. For the most part, the owner of the certificates can make a tidy


Most of the certificates for sell by counties are sold via auction, with enough time to inspect and research the properties beforehand. The main downside of them being sold this way is that they are sold in blind lots, meaning that people are not aware of the exact property in which they are bidding. This can mean that the person may have to keep bidding for particular properties they want. This will mean they may get a few bad properties before the good. Another downside is if the property has a federal lien on it. The person that holds such a certificate gets the property, as if they had the first county tax lien certificate.

Uses and advantages

People who want to acquire lots of land or houses for any number of reasons can use this way to help keep the costs down during the process. These folks may want the land for rental properties or to build businesses. This is also an expedient way to help someone build personal wealth. This isn’t a get rich quick method, though. It takes patience and there can be some missteps, but it can be productive on several levels.

Category: Insurance

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