property sold for back taxes

In at least some places (towns in NY State that I know of), the tax lien is sold to the lowest (interest rate) bidder. If the owner doesn't pay within 2 years, the property is sold and the liens paid off with interest at the bid rate.

Seth

wow - a whole new area that I never encountered....

How to lose a property - not because you didn't keep up the mortgage, but because you didn't pay the taxes......

What's weird, when I did a records search on the property, I didn't see any recent activity since about 2006.... and the taxes that were "sold" were the 2010 taxes.

I would have expected to find a tax lien recorded on the property, then some other release-type action transcribed for the property when the taxes were paid by the 3rd party....

SO - forget keeping up with the mortgage & foreclosure, you can lose everything within 2yrs of back taxes.

interesting....

weird and scary -

It's called tax lien investing. I saw an ad about it on late night TV once.

Vulture capitalism? I wonder if the city has an option for you to set up an installment plan for less interest than what the person who acquired the tax lien would charge. Also, I'm sure that there is a provision in the local law that if you are not notified properly then the tax lien is invalid. Lots of foreclosures are considered invalid because of robosigning, so it means there is a tedious procedure to follow to make sure foreclosures and liens are done right.

Anyway, here's a tax question. Suppose you pay off the property tax plus exorbitant interest. The tax and interest is paid to the person who has the lien, not to the government. So is what you pay deductible? And if so, all of it or just the property tax principal? Can the person who pay the original property tax due in order to acquire the lien deduct the property tax? I think the answers are: owner can just deduct the property tax not the interest which is a form of penalty, tax lien holder cannot deduct property tax as they don't own the property unless they are a corporation.

exorbitant interest. The tax and interest is paid to the

And if so, all of it or just the property tax

acquire the lien deduct the property tax? I think the

form of penalty, tax lien holder cannot deduct property

I disagree with the latter. The tax lien holder didn't pay any taxes, he purchased an asset (the tax lien). That provides his basis when the asset is sold.

Seth

Well, once you accept the concept of property taxes, you need an enforcement mechanism.

Don't be so sure. Remember, the lien is created *by* the city/town (not by the investor) and one part of government scratches the other part's back. The tax lien rules are generally governed by state law.

I wouldn't be surprised if the lien is actually *permanently* on the property, In MA when you sell property you have to get a "municipal lien certificate" where the town certifies you aren't delinquent. The certicate gets recorded along with the deed, mortgage, etc.

Again in MA, I'm pretty sure all a town has to do to force a delinquency sale is to wait for the statutory delinquency period (matter of months) to pass and then just publish a notice a few times in the local weekly (not even in a major paper) stating when the sale will occur. I don't know if the rules are different when an investor buys the tax lien and goes to force a sale.

yeah - I was curious about that, and looked up the property on the County Clerk website. interesting....

can see all the activity back to 1997 - but nothing past 2006....So, the current tax "lien" is not recorded as such with the County Clerk.Therefore, not sure how I would even know about this doing the usual searches.... Again - I'm not involved - just trying to learn what has happened to this friend of my wifes...

Different from state to state. In Florida, my usual searches included a stop at the county tax collector's office - the only place to identify delinquent property taxes, tax certificates, and pending tax deed sales.