Tax Lien Certificates: Another Investor Opportunity

The will be holding a "Tax Certificate Seminar" from 6-8 p.m. May 10 for people who are interested in learning more about the online process of bidding on and purchasing tax certificates.

If the term "tax certificate" is one that you’re only vaguely familiar with, here are some facts and some outside resources to assist you in learning more about this investment opportunity.

What is a tax certificate?

A tax certificate is created by the sale of a tax lien (we all have tax liens placed on our properties each year, but they are removed when the taxes are paid) for payment from an outside investor on behalf of the homeowner who is not able to pay their property taxes. Property taxes become delinquent on April 1 of each year.  Since our local government provides funding for critical public services like  schools and police/fire departments with money collected through taxation (property taxes being one of those taxes) those delinquent taxes are "collected" by creating tax certificates that are sold by public auction. This process enables the government to, without interruption; meet its budgetary obligations to these public service organizations.

What benefit does an investor enjoy when purchasing tax lien certificates?

The maximum rate of return on a tax lien is, potentially, much higher than other types of investments.  In Florida, the maximum percentage rate is 18 percent (or 1.5 percent per month). If, after two years, the taxes remain delinquent, the tax certificate holder can make application for a tax deed. This action by the certificate holder brings the property to public auction for sale. The certificate holder may bid on the property, if they decide that it might be a good real estate investment, or they may just elect to receive payment for the certificate /interest when the property is sold.

How does the investor receive a return on his or her tax lien certificate investment?

In order for the tax lien to be removed from the homeowner’s property, the amount of the tax lien certificate and the interest accrued (calculated from the date of the tax certificate sale up to the month that the payment is made) must be paid. The investor receives payment of the initial investment plus the interest earned in the form of a direct deposit set up by a pre-arranged agreement) from the Tax Collector’s office into the investor’s checking or savings account.

There are stipulations, risks, and rules to be aware of if you are considering this type of investment option, so it’s vitally important to take the time necessary to do your research. You may utilize the local tax collector (sign up for the tax lien certificate seminar!) and other local governmental resources to ask questions in order to become familiar with the process, the rules, and the associated rewards and risks of tax lien certificate investments.     

Below are some links to resources that may be educational and helpful. 

 TAX COLLECTOR RESOURCES AND CONTACT NUMBERS

 TAX LIEN CERTIFICATE AND TAX DEED SALE PROCESS EXPLAINED

MANATEE COUNTY TAX COLLECTOR TAX CERTIFICATE SEMINAR INFO

MANATEE COUNTY TAX DEED SALE PROCESS RESOURCE