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Our attorneys and staff work hard to ensure that each of our clients receives a tailored experience based on their specific legal–and practical–needs.

 Investing in a Tax Lien Property – the Pros and Cons

Before we delve into the benefits and risks of buying a tax lien property, it is essential to understand what a tax lien is. If we put it in simple words, a tax lien is a legal claim attached to real property because the owner has failed to timely pay property taxes (or some other charges, fines, or fees).

A tax lien can be placed on any piece of real property by the local tax collector if the owner has not paid the property taxes for that property.

Advantages of Investing in a Tax Lien Property

Also known as tax lien certificates, a tax lien investment has several advantages. Let’s begin by weighing the pros of investing in a tax lien property and tax lien certificates.

·        Earning high interest

Though tax lien investing can be a bit more complicated than having shares in stocks or mutual funds, the significant advantage is that you can earn a higher rate of interest, often between 12% and 18%, when the property redeems (the taxes are paid and the lien is released).

·        Buying a tax lien certificate won’t cost you much

Another benefit is that purchasing a tax lien certificate will not put a huge dent in your pocket. Unlike investing in a rental property that calls for a mortgage or a large amount of cash, this might be a reasonable option.

·        Getting tax lien funds

The best approach to a tax lien investment is to buy it with the support of an expert tax lien attorney. This will help make the process hassle-free as you can benefit from their expertise and knowledge.

·        Proceedings of tax lien foreclosure

The tax lien law gives a specific time frame within which the property owner may redeem the property. If you own a tax lien, and if the owner cannot pay the taxes in the allotted time, you might get the chance to start tax lien foreclosure proceedings, with the help of an experiences tax lien attorney, and eventually own title to the property.

Disadvantages

Though there are pros of purchasing a tax lien property, it comes with its set of cons as well. Listed below are some of the disadvantages.

·        It is not a liquid deal

As tax liens have a specific time frame, the investor has to wait for some time before getting a return on their investment.

·        Investing in a useless tax lien property

Another major risk is that the investor might end up with a piece of land that the existing owner doesn’t need, or want. In such a case, the owner might be eager to let it go rather than pay the taxes

·        Bankruptcy can affect tax liens

For instance, if the landowner claims to be bankrupt while owning the piece of land, this could impede the tax lien investor’s investment, resulting in a reduced amount of interest or waiting for a long time for any return.

Maryland Tax Lien Attorney

Remember to do your research and consult a professional tax lien attorney before investing in a tax lien property. If you are searching for a Maryland tax lien attorney, LewisMcDaniels will help solve all your tax lien and tax lien foreclosure issues from helping you understand the process, to the civil litigation involved in tax lien foreclosure, to helping you take title to a property.

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