When property owners do not pay their property taxes for an extended period, the municipality intervenes to collect. A municipality's last recourse is to take the property from the owner and sell it, which they are legally allowed to do. These are tax-delinquent homes. Their sale will enable them to recover unpaid taxes, interest, and fees.
Here is more about tax-delinquent homes and how they work.
What does a tax delinquent home look like?
Tax-delinquent homes look like any other. The reasons why homeowners do not pay their property taxes vary. They may be in debt, unable to afford, or require financial assistance.
It could be a situation where an older adult with dementia is not capable of managing their finances. It could also be a newly disabled person who is no longer able to work and cannot pay the amounts owed.
How long do tax liens take?
Though this varies by municipality, if property taxes are not paid within two or three years and no arrangement is made, the property is collected. This prevents the owner from selling or transferring property ownership and requires them to pay the outstanding debt, or someone else assumes ownership.
Does a tax delinquent home have a mortgage?
No, the mortgage and other interests on the property – except Crown interests – are null and void. A buyer will not have to deal with the prior owner's mortgage.
How are tax delinquent homes sold?
Tax delinquent properties are published in public listings and sold by public auction or public tender. Public tenders are used to submit bids by mail with the required forms and a deposit included.
What is the average sale price of tax delinquent homes?
Tax sale houses are offered to the general public with an assessed value and a minimum bid amount. At the minimum bid amount, bidders make offers. While multiple bids drive up ownership costs, most tax-delinquent homes are sold for well under their assessed value.
What are tax sale listings?
Listings for tax-delinquent homes are released regularly throughout the year. They come directly from the municipality and are often featured on its website. Listings are bare but include property specifications, photos, and other information.
What are the best places to find tax delinquent homes?
Tax sales are held in every municipality annually. Tax-sale homes exist in rural and urban areas. They may be in a residential neighborhood or a plot of undeveloped land. Many tax-delinquent homes and tax sale opportunities exist for investors looking far enough.
Why should you buy tax sale properties?
For a buyer, purchasing a tax-sale home has many benefits. The main advantage is that you can buy a home for as little as half its value and sometimes far less. It provides a pathway to homeownership, investment properties, rentals, and a way to earn your way into real estate investing.
Are tax delinquent homes profitable?
For example, in real estate, only some pieces of land or houses will yield profit. Do your research.
However, it's not uncommon to buy a tax-delinquent home, fix it up, renovate it, and resell it at market value, clearing hundreds of thousands of dollars in profit. Anyone interested in flipping houses may find tax-delinquent properties a fantastic opportunity.
What is the state of tax sale houses?
A tax-delinquent house put up for auction or tender is sold as-is. The municipality does not guarantee anything about the property. Any damage or repairs required fall on the new owner to manage. Environmental contamination is the new owner's responsibility.
Furthermore, there is no right to complete a home inspection before buying a tax-sale house, which means a buyer purchases this real estate without knowing what's on the other side of the door.
What is the best way to research a tax delinquent house?
Just because a home inspection is not possible does not mean a prospective buyer should not research. Complete a title search to determine if Crown interests or liens are attached to the property. Review the neighborhood and local real estate market for indications of land value.
Consider visiting the property and evaluating it from public property, such as a local park or road. See if there are any red flags or warning signs when you look at it from the outside that may cause you not to purchase it.
Is the prior homeowner still liable?
A preexisting owner loses their rights to a property when it becomes tax delinquent. They may be offered a redemption period during which they can pay their debts and qualify for an exemption. However, after that passes and the property is sold, a new owner does not need to worry about the prior owner making a claim.
