Types of Florida Tax Sales and Auctions

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Types of Florida Tax Sales and Auctions

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During the years Florida's real estate market looked like it was launched from the Kennedy Space Center, there was little mention or interest in tax sales. After the market fell from its lofty heights, tax sales have become mainstream as more and more homes are behind on mortgages as well as taxes.

So what happens when a homeowner does not pay property tax? The county, or taxing authority, specifies a normal period of time which allows the property owner to pay all past due taxes plus interest and penalties. If the taxes remain unpaid after the time runs out, the county will then issue a lien on the property. This is called a tax lien.

A tax lien is a legal attachment to a property to secure payment of taxes. This may be a result of delinquent taxes on real or personal property, or as a result to pay income or other taxes.

As long as a tax lien is on a property, it can not be sold, transferred or otherwise disposed of until all taxes are paid. While the time element varies by county there will be a point which, after notifying the property owner, the county will place the lien for sale. This is normally when investors enter the picture, as buying tax liens can be quite profitable.

Going by a variety of names such as tax lien sale, tax lien auction or just tax sale, this refers to all tax sales and auctions in a given area conducted by Florida county tax collectors. Every county in Florida conducts auctions of tax certificates on or before June 1st each year.

Purchasing a lien is a relatively safe investment as most tax liens are redeemed before the property is foreclosed upon. Florida, for example, guarantees a minimum 5 percent return when the lien is redeemed. An investor could purchase a lien today and have it redeemed tomorrow and will make a full 5 percent of the purchase price of the lien, or an annualized return of 1,825 percent.

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Tags: • investors • tax lien • property tax • property owner • buying tax liens • real estate market • auctions • florida • tax sales •

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