Question: Once I get the deed to a tax sale property, will I be able to take out a loan on that house, or will I have to clear the title first?
Answer: You generally will need to clear title before you can take out a loan. If there is a legal challenge period following foreclosure of a property, during which the previous owner or other interested party can challenge the tax sale, you will normally have to wait for that period to expire before you can clear title. In California, for example, the legal challenge period is one year; in Arkansas it is two years. Usually counties/states advise that you not make any major improvements to the property during this time period.
We work with a company that can, in most cases, clear or perfect the title in about 45 days. Their costs are reasonable and they have been doing it for years. This is a wholly separate company, so we will just provide you with the personal contact.
Contact us at 913-381-4520 or info@rogueinvestor.com.
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The Platinum Rogue Investor Collection has the answers to all your tax sale questions!
www.rogueinvestor.com/government_tax_sales_book.html
Friday, December 10, 2010
Thursday, December 9, 2010
Purchasing U.S. Tax Lien Certificates from Abroad
Buying tax liens or tax deeds in the U.S. normally requires a social security number or a federal tax I.D. number. One way for nonresidents to work around this is to start a small business, such as a limited liability company (LLC), and receive a federal tax I.D. number.
Another method is to obtain an Individual Taxpayer Identification Number (ITIN). According to the U.S. Internal Revenue Service, federal law requires individuals with U.S. income, regardless of immigration status, to pay U.S. taxes. The ITIN, a nine-digit number that begins with the number 9, was created for use on tax returns for those taxpayers who do not qualify for a social security number. The IRS has issued 7 million ITINs since 1996.
For more information, visit http://www.irs.gov/newsroom/article/0,,id=112728,00.html.
Any nonresident or U.S. resident alien who is required to file taxes or who can be claimed as an exemption or dependent on a tax return, and who does not qualify for a social security number, can apply for an ITIN. See Publication 501, “Exemptions, Standard Deduction and Filing Information for Exemption Tests” and Publication 519, “U.S. Tax Guide for Aliens” to determine resident status.
You do not need an ITIN if:
• you are a U.S. citizen,
• you were born in the U.S. and do not have diplomatic immunity,
• you have entered the U.S. on a work VISA, or
• you are entitled to a federally funded benefit (stipend/fellowship/grant).
You are eligible for an ITIN if:
• you have entered the U.S. on a non-work VISA,
• you were born in the U.S. and have diplomatic immunity,
• you have applied for and were denied a social security number, or
• you are an undocumented alien.
You can obtain ITIN application forms, W-7/W-7SP, through IRS offices worldwide:
• 1-800-TAX-FORM (1-800-829-3676)
• http://www.irs.gov/
• Tax Fax Service at 1-703-368-9694
• IRS kiosks.
Submit your ITIN forms and supporting documentation to:
• IRS Taxpayer Assistance Centers (TACS),
• certain U.S. consular offices abroad,
• a Certified Acceptance Agent, or
• mail to:
PSPC ITIN Unit
P.O. Box 447
Bensalem, PA 19020
DP N-280
For ITIN Frequently Asked Questions, visit:
http://www.irs.gov/individuals/article/0,,id=96287,00.html.
Download Form W-7, Application for IRS ITIN, at http://www.irs.gov/pub/irs-pdf/fw7.pdf.
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Visit http://www.rogueinvestor.com/ for more tax lien certificate investing information.
Another method is to obtain an Individual Taxpayer Identification Number (ITIN). According to the U.S. Internal Revenue Service, federal law requires individuals with U.S. income, regardless of immigration status, to pay U.S. taxes. The ITIN, a nine-digit number that begins with the number 9, was created for use on tax returns for those taxpayers who do not qualify for a social security number. The IRS has issued 7 million ITINs since 1996.
For more information, visit http://www.irs.gov/newsroom/article/0,,id=112728,00.html.
Any nonresident or U.S. resident alien who is required to file taxes or who can be claimed as an exemption or dependent on a tax return, and who does not qualify for a social security number, can apply for an ITIN. See Publication 501, “Exemptions, Standard Deduction and Filing Information for Exemption Tests” and Publication 519, “U.S. Tax Guide for Aliens” to determine resident status.
You do not need an ITIN if:
• you are a U.S. citizen,
• you were born in the U.S. and do not have diplomatic immunity,
• you have entered the U.S. on a work VISA, or
• you are entitled to a federally funded benefit (stipend/fellowship/grant).
You are eligible for an ITIN if:
• you have entered the U.S. on a non-work VISA,
• you were born in the U.S. and have diplomatic immunity,
• you have applied for and were denied a social security number, or
• you are an undocumented alien.
You can obtain ITIN application forms, W-7/W-7SP, through IRS offices worldwide:
• 1-800-TAX-FORM (1-800-829-3676)
• http://www.irs.gov/
• Tax Fax Service at 1-703-368-9694
• IRS kiosks.
Submit your ITIN forms and supporting documentation to:
• IRS Taxpayer Assistance Centers (TACS),
• certain U.S. consular offices abroad,
• a Certified Acceptance Agent, or
• mail to:
PSPC ITIN Unit
P.O. Box 447
Bensalem, PA 19020
DP N-280
For ITIN Frequently Asked Questions, visit:
http://www.irs.gov/individuals/article/0,,id=96287,00.html.
Download Form W-7, Application for IRS ITIN, at http://www.irs.gov/pub/irs-pdf/fw7.pdf.
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Visit http://www.rogueinvestor.com/ for more tax lien certificate investing information.
Monday, December 6, 2010
Tax Foreclosures and the Mortgage
Question: What happens to the original mortgage on a home after a tax foreclosure?
Answer: The mortgage company is like an owner of the property. It receives notification of the taxes due, and can redeem the taxes to avoid a foreclosure. If the property goes through tax foreclosure (i.e., to deed), you as the investor own the property. However, in some states there is a legal period following tax foreclosure during which the previous owner (or mortgage company, lien holder, etc.) can challenge the sale. Otherwise, tax foreclosure wipes out the mortgage and most other liens, except federal IRS liens and county or city assessments. In New Mexico, mortgage liens may not be extinguished. In Pennsylvania, mortgage liens are not extinguished on properties sold at the Upset Price Sale. Properties not sold at the Upset Price Sale are auctioned again, free and clear of liens (including the mortgage), at the Judicial Sale.
Visit www.rogueinvestor.com/government_tax_sales_book.html for more information about tax sale investing.
Answer: The mortgage company is like an owner of the property. It receives notification of the taxes due, and can redeem the taxes to avoid a foreclosure. If the property goes through tax foreclosure (i.e., to deed), you as the investor own the property. However, in some states there is a legal period following tax foreclosure during which the previous owner (or mortgage company, lien holder, etc.) can challenge the sale. Otherwise, tax foreclosure wipes out the mortgage and most other liens, except federal IRS liens and county or city assessments. In New Mexico, mortgage liens may not be extinguished. In Pennsylvania, mortgage liens are not extinguished on properties sold at the Upset Price Sale. Properties not sold at the Upset Price Sale are auctioned again, free and clear of liens (including the mortgage), at the Judicial Sale.
Visit www.rogueinvestor.com/government_tax_sales_book.html for more information about tax sale investing.
Thursday, December 2, 2010
ASSIGNMENT OF TAX LIEN CERTIFICATES
“Assignment” of a tax lien certificate is simply the process by which the holder of the certificate changes from one party to another. The assignment of tax lien certificates may be conducted by individuals, or by the taxing jurisdiction itself (e.g., counties and municipalities).
Individuals
Perhaps you have decided that it is time to sell your tax lien certificate. You may want to buy something different, or you may just want the cash. Many state tax sale laws allow the assignment of a tax lien certificate from the holder to another party (the assignee). Because the state law may give individual counties a choice in allowing this, you will need to contact the county to ask if they allow assignments, if there is a grace period for doing so, and what the process is.
The county may require a grace period of six months to a year before you can assign a certificate. Typically, the county will charge a fee to process the assignment (in Douglas County, Nebraska, the fee is $10), and documentation on the party the certificate is being assigned to. Most counties want to be sure that the certificate holder does not have any outstanding taxes or other fees due to the county.
Taxing Jurisdictions
In many states, when a certificate goes unsold at a sale the lien is sold to the county itself (or other taxing jurisdiction). Because no one bid on them, these certificates always accrue the highest interest allowed by state law. Typically, the county can either assign these certificates “over-the-counter” (i.e., you can purchase certificates directly from the county through the mail) or foreclose on them and then sell the properties. Counties generally aren’t in the business of owning and selling real estate, so assigning the certificates is a more attractive option to them. In addition, foreclosing and selling property takes time and has added costs associated with it.
Assignees
As an assignee, you will want to understand the tax lien certificate process in the county you are buying a certificate in, the collateral for the tax lien, and what the rate of return is for your investment. Although the assignment does not represent a sale of real, physical property, you should do your due diligence on the property in case you have the opportunity to foreclose on it. You should ask yourself why this lien wasn’t purchased at the sale.
Visit www.rogueinvestor.com/government_tax_sales_book.html for more information.
Individuals
Perhaps you have decided that it is time to sell your tax lien certificate. You may want to buy something different, or you may just want the cash. Many state tax sale laws allow the assignment of a tax lien certificate from the holder to another party (the assignee). Because the state law may give individual counties a choice in allowing this, you will need to contact the county to ask if they allow assignments, if there is a grace period for doing so, and what the process is.
The county may require a grace period of six months to a year before you can assign a certificate. Typically, the county will charge a fee to process the assignment (in Douglas County, Nebraska, the fee is $10), and documentation on the party the certificate is being assigned to. Most counties want to be sure that the certificate holder does not have any outstanding taxes or other fees due to the county.
Taxing Jurisdictions
In many states, when a certificate goes unsold at a sale the lien is sold to the county itself (or other taxing jurisdiction). Because no one bid on them, these certificates always accrue the highest interest allowed by state law. Typically, the county can either assign these certificates “over-the-counter” (i.e., you can purchase certificates directly from the county through the mail) or foreclose on them and then sell the properties. Counties generally aren’t in the business of owning and selling real estate, so assigning the certificates is a more attractive option to them. In addition, foreclosing and selling property takes time and has added costs associated with it.
Assignees
As an assignee, you will want to understand the tax lien certificate process in the county you are buying a certificate in, the collateral for the tax lien, and what the rate of return is for your investment. Although the assignment does not represent a sale of real, physical property, you should do your due diligence on the property in case you have the opportunity to foreclose on it. You should ask yourself why this lien wasn’t purchased at the sale.
Visit www.rogueinvestor.com/government_tax_sales_book.html for more information.
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