What is a Tax Lien and How Can You Profit From It? Frequently Asked Questions About Tax Liens 1. What is a Tax Lien Certificate? A tax lien is the name of the claim that a taxing authority, such as the local or federal government, makes when an individual has not paid taxes for a lengthy amount of time. Tax Liens are most often applied to homes. Essentially, the government ceases control of the property, pending payment on taxes. The taxing authority, will then sell a certificate for an asset, such as a piece of real estate or boat, if the owner of the property has been negligent in paying his or her taxes. Anyone can purchase a certificate by attending a tax lien sale auction in the county in which the unpaid taxes are owed. 2. How can I make money from my tax lien certificate? You may be surprised to know that Tax Lien Certificates are far more profitable than Certificates of Deposit and just as safe. Tax Liens are also safer than the stock market and offer an equal rate of return. If you invest in a tax lien certificate, you can earn a very high interest as much as 25% on the unpaid taxes from the owner of the property, which will be owed directly to you instead of the government. Since the interest earned currently on a CD or a regular savings is only about 3-4%, it really pays to check out the tax lien strategy to get a higher payback. Essentially, you are acting like a bank and gaining interest even though you never made the loan because you owe the certificate. Once all of the interest and taxes are paid, then the property owner can reclaim the property by gaining control of the tax lien certificate from you. However, if the owner never claims the property or pays the taxes, then you will gain ownership of the property deed. Either way, you'll be in a position to make money from the tax lien on the property by gaining either interest or the property itself. 3. Can I purchase a tax lien in a town in which I do not reside? Yes. You can purchase a tax lien in any town, even if you are not a resident of the particular town. The only trick is that you have to actually travel to the town in order to attend the tax lien sale auction. 4. What is a tax lien sale auction? A tax lien sale auction is the method by which tax lien certificates are sold. Like any auction, bidders will bid for the property or tax lien properties that they are most interested in purchasing. You can bid for as many properties at one time as you desire. 5. Where do I find out where the tax lien auctions are? Information on tax lien sale auctions are matters of public record. You can contact the local government in the town in which you choose to purchase a tax lien, or you can subscribe to a service online that provides that data to you. Visit http://www.liensource.net/ for more information on subscriptions to information. 6. How often do tax lien sales occur? That varies. There are generally 1-3 tax lien sales a month per locality. Check with the local government for more information and to obtain a tax lien sale calendar. 7. How much capital do I need to begin? The amount of money you need to invest into your tax lien purchase business depends entirely on the particular properties you're interested in purchasing. Properties range from small homes to mansions. © Copyright Courtney Park, All Rights Reserved. About the Author: Courtney is owner of http://www.home-business-web.com For more information on home-based business ideas, and jobs for stay-at-home moms, check out http://www.home-business-web.com/part-time-business-ideas.html and http://www.home-business-web.com/jobs-for-moms.html Tax  Net Inc, the parent company of “the Home Based Tax Preparer”, has developed a system where qualified professionals can work at home and provide better service at a lower price to the consumer. Tax Net Inc and all the divisions are proud members of the Better Business Bureau of Denver/Boulder, Colorado.    There are three divisions of the Home Based Tax Preparer. CPA Moms/Dads Tax Moms/Mr Tax Moms Next Day Tax Cash  Regulatory and Disclosure Information for the following web sites: www.cpamoms.com www.cpadads.com www.taxmoms.com www.asktaxmoms.com www.askcpamoms.com www.nextdaytaxcash.com We do not render or offer to render personalized investment advice, financial planning advice, tax planning, or tax preparation through this medium. This medium is limited to providing you with general information about services and provides a way for you to contact us. The information in this web-site is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, and does not purport to be complete and is not intended as the primary basis for investment or tax decisions. It should also not be construed as advice meeting the particular investment needs of any investor.  Any tax information communicated, shared, faxed or emailed to Tax Net Inc or any of their divisions is held in strict confidentiality.   This information is not used, sold or shared with any other business entity or individuals.