#2 Pay Your Taxes (Especially Property Tax)

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#2 Pay Your Taxes (Especially Property Tax)

Homeowners can protect their housing investment by staying current on property and personal taxes to avoid tax liens. But their is one tax lien that happens annually and automatically:

Property Tax – The Automatic Lien

Essentially, each and every year owners of real estate have a tax lien — which is a financial obligation to pay taxes — placed on their real estate. When property faxes are paid on time the tax lien is removed.

If they are not paid, in due time the county government will allow a tax sale, usually a public tax sale auction, where anyone can pay on behalf of the real estate owner. The winning bidder receives a Tax Lien Certificate as proof of the lien they now own.

 Here is where homeowners need to understand their Right of Redemption. A taxpayer has the right in Georgia, to get real property back within one year after it is sold at auction by paying all past due taxes, penalties and interest imposed by the new lien-holder. This means that the unfortunate homeowner can indeed redeem their property by buying the lien back from the new lien-holder.

But beware! If the purchaser is a real estate investor, they will be looking for a hefty return on their investment. As the new owner of the tax lien certificate, the investor may expect one of two outcomes: 1) an annualized return of up to 50% per year on what they paid to obtain the certificate, or 2) become the actual owner of the real property through foreclosure.