Buying Tax Liens-Indiana

[Jolene U.]

My husband & I are very interested in purchasing tax liens. Has anyone done this? Can anyone tell me the best place for more info on doing this?

[Ned Carey]

@Rita Koroll There are two types of tax sale: tax liens and tax deeds

With a tax deed you are buying the property at auction. The local government has taken the property back and is selling it at auction.

With a tax lien you are getting a lien against the property. Essentially the city or county is selling you the right to become the tax collector. When the owner pays the taxes you get both the original tax amount plus and interest and penalties. In Maryland that can be as high as 20% interest on the tax amount. 

If the property owner does not pay off the tax lien you can foreclose and get the property free and clear. You wipe out any mortgages. So tax liens are theoretically a win win . You either get high interest or you get the property.

Of course the devil is in the details. There are a lot of details in the tax lien business and the rules vary tremendously by state and even county. Because on the surface it is such a good deal, tax auctions tend to be very competitive.