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.
-----------------
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.
Saturday, October 16, 2010
Veteran's Administration Foreclosures and Vendee Financing
The Veteran's Administration has a wonderful program that allows our veterans to qualify for a home with no money down. It is really a benefit that we extend to service men and women to say thank you. In most cases, it works well. However, the downside is that default rates are higher than properties purchased with 5, 10 or 20 percent down. So even though a bank may have issued the mortgage, the U.S. government is responsible for a defaulted mortgage.
In the VA program they do something unique to move these properties. The VA offers its own financing called VA Vendee financing. So, even if you are an investor, you can qualify for VA financing. Most prospective home buyers and investors do not understand the difference. You Do Not Have To Be A Veteran to qualify for VA Vendee financing.
And, here are a few other facts that make it interesting:
In the VA program they do something unique to move these properties. The VA offers its own financing called VA Vendee financing. So, even if you are an investor, you can qualify for VA financing. Most prospective home buyers and investors do not understand the difference. You Do Not Have To Be A Veteran to qualify for VA Vendee financing.
And, here are a few other facts that make it interesting:
- Vendee mortgages are assumable by qualification
- Vendee financing is not a credit score driven product
- Low interest rates - usually the going rate
- Owner occupied can be financed as little as 0% down
- Investors can finance as little as 5% down
- Investors can use 75% of the anticipated rent to offset monthly payments
- No maximum number of investment properties.
Join me in Kansas City, Missouri on November 13-14, 2010 to learn more about buying government and bank foreclosures. We will spend one whole day looking at properties that you can purchase right then.
Sunday, April 19, 2009
Nevada LLCs
Nevada Limited Liability Company:
Why consider setting up an LLC?
The simple answer is for protection of assets. Essentially, it is a preferred business strategy to separate your personal assets from your business and/or real estate assets. One way to do this is by setting up a business entity with a different name and preferably a unique tax identification (I.D.) number that is different than your social security number.
LLCs are similar to Chapter S corporations, except they can exist for a defined period of time. Owners receive the tax advantages of a partnership, while also receiving the protection of a corporation. To make it even better, all states except Massachusetts allow an LLC to be formed with one person.
LLCs may be formed for most businesses, except some professional businesses that require licensing for protection of the public. Generally, doctors, lawyers, accountants and other professionals cannot use an LLC to practice.
Another reason to set up an LLC is that some states and other government agencies require either a U.S. social security number or a federal tax I.D. number to invest in foreclosed properties. For those of you living outside of the United States, this is a great way to obtain a federal tax I.D. number.
Summary of LLC benefits:
* Allows for partnerships with limited liability.
* Helps protect personal assets of owners or members.
* One owner/member allowed in all states, except Massachusetts.
* May not require an annual shareholder meeting, like Chapter C and S corporations.
* Favorable tax status can be set up and taxed at owner's tax rate (default) or as a company (requires filing other paperwork).
* New series LLC makes structuring for multiple properties easier.
How does an LLC work?
First, decide whether you will be setting up the LLC yourself or whether you will contact an attorney or accountant. If you are planning to do it yourself, then decide where you will set it up. You do not have to set up an LLC in the state that you reside in; however, it may be easier. If you plan on setting it up in another state, you will probably need an agent or representative who lives in that state to act on your behalf. There are companies that will gladly do this for a small annual fee.
Decide on the structure of the LLC. There are two main types of LLCs. One is called a member-managed LLC and the other is called a manager-based LLC. A member-managed LLC essentially says that all owners ("members" in LLC lingo) are equally responsible for management of the LLC. A manager-based LLC says that certain members (the "managers") are given authority to run the LLC.
Decide on a name. Check your state's requirements. Usually the name must incorporate "LLC," "Limited Liability Company," or some other variation. Check with the state to make sure the name has not been taken, before filling out the paperwork.
To set up an LLC, you really only need to fill out Articles of Organization; however, you should also have an Operating Agreement that specifies the details of ownership, compensation, voting rights, distribution and what to do in case someone quits or dies.
Here are my three favorite states to consider: Nevada, Wyoming and Delaware.
You may want to factor in where you live and consider setting up an LLC in your own state, especially if you are only investing in your home state.
A big advantage to incorporating in Nevada is that the state imposes no income taxes on either its citizens or its corporations. Therefore, profits made by your LLC are not taxed. Additional corporate taxes that are not collected in Nevada include the following:
* franchise tax
* capital stock tax
* stock transfer fee or tax
* tax on corporation shares
* succession tax.
A high level of privacy with respect to ownership in a corporation is provided for by Nevada laws. For example, there is no law requiring that stockholder names be filed with the state and be made public record. Another example is Nevada Revised Statute 78.257, which imposes strict sanctions against non-stockholders who attempt to inspect corporate documents or use them for purposes contrary to the interests of the stockholders. Because of these and other privacy provisions, and for budget reasons, Nevada does not keep much information on its corporations. As a result, unlike other states Nevada has no information sharing agreement with the IRS and has refused IRS requests for reciprocity.
Nevada is a state with charging order protection of assets. In other words, a creditor or suing individual (and even the IRS) is only entitled to distributions made from the LLC, through a charging order. As long as the LLC doesn't make any distributions and, since the purpose of the LLC could be for long-term investments using your self-directed IRA, no distributions are made assets of the LLC are protected.
A new benefit to setting up a Nevada LLC is the ability to structure your LLC as a series LLC. What this means is your base LLC can contain subunits or sub LLCs within the parent LLC. Sounds complicated, so why the heck would anyone want to do this? The answer is to separate distinct businesses or properties from one another.
For more information on setting up an LLC yourself, visit http://www.rogueinvestor.com
-Michael Williams
Friday, April 3, 2009
Business Interest is Gaining Ground
Interest in business is gaining ground according to my contacts who book shows and work with the likes of Kiyosaki, Robert Allen and Trump University. This change is likely occurring due to the highest unemployment levels since the early 1980's.
Many people are especially interested in U.S. government grants and stimulus package money that is available. Also, tapping into self-directed IRAs is one of the latest ways to realize the dream of owning your own business.
If you are interested in starting a business or tapping into government money, please visit me at one of our workshops.
-Michael
www.rogueinvestor.com
Many people are especially interested in U.S. government grants and stimulus package money that is available. Also, tapping into self-directed IRAs is one of the latest ways to realize the dream of owning your own business.
If you are interested in starting a business or tapping into government money, please visit me at one of our workshops.
-Michael
www.rogueinvestor.com
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