If you have ever seen a house selling for a fraction of its market value and wanted to buy one for yourself, you must know what a back taxes property for sale is. This investment can be a goldmine for investors and first-time buyers alike if you know what you’re doing.
In this guide, we’ll break down exactly
- What back taxes houses for sale?
- How to find them?
- How the auctions work?
- How to buy without falling into costly traps?
Let’s begin.
What Are Back Taxes on Properties in Real Estate?
While the idea of buying tax-delinquent homes might sound appealing, it’s important first to understand why these properties end up in a selling situation and what legal terms you need to know before diving in.
Learning how tax issues create buying opportunities can open new doors for you.
Understanding Tax-Delinquent Properties
A tax-delinquent property is a home or land where the owner hasn’t paid their property taxes for a long time. These unpaid taxes pose a problem for cities and counties that rely on them for schools, roads, and police services.
When this happens, the local government has the right to take action. They might place a tax lien or even sell the property to recover the money.
This creates an opportunity for buyers like you to acquire properties at a price below market value.
Common Causes of Tax Defaults
Why do people stop paying taxes on their homes? Here are some common reasons:
- Job loss or financial hardship
- Health problems or death in the family
- Inherited properties where heirs don’t keep up with taxes
- Elderly homeowners who simply forget or can’t afford to pay
These situations result in foreclosed properties due to taxes, which are then sold at public auctions.
What is a Tax Lien on a Property, and How Does it Work?
A tax lien is a legal claim by the government for unpaid property taxes, issued after multiple notices. The owner can’t sell or refinance until the taxes are paid.
If the owner doesn’t pay what’s owed, the county can sell the lien to someone else, giving you a chance to collect the debt with interest or even own the property if it’s not paid back in time.
Read → Can You Buy a House If You Owe Taxes?
Types of Back Tax Property Sales in the U.S.
Here are the key types of tax sales available across the country, so you can decide which one aligns with your goals.
Tax Lien Sales
Some states allow you to buy the tax lien itself. You don’t own the home. But if the owner doesn’t pay you back in time and is unable to remove the tax lien from the property, you might be able to take the property through foreclosure and ultimately own the property. These are referred to as tax lien homes for sale.
Tax Deed Sales
In a tax deed sale, you’re buying the actual property. These occur after the owner has had numerous opportunities to pay but has failed to do so. These are true property sales, and you may walk away with a home for 30–50% of its actual value.
States like Florida may use both liens and deeds depending on the county or timing.
Here’s a simple table comparing tax lien certificates and tax deed sales:
Feature | Tax Lien Certificates | Tax Deed Sales |
What is sold? | A lien (claim) on the property for unpaid taxes | The actual property itself |
Who buys it? | You pay the unpaid taxes to the government | You buy the full property at auction |
Ownership rights | No immediate ownership; only holds the right to collect debt | Immediate full ownership of the property |
Investor gets paid back? | Yes, by the property owner with an interest during the redemption period | No repayment expected; you own the property |
Can it lead to foreclosure? | Yes, if the owner doesn’t repay on time | No foreclosure needed; the property is already transferred |
States that use it | Arizona, Florida, Illinois, Iowa, Maryland, Nebraska, New Jersey, New York | California, Georgia, Michigan, Texas, Washington, Wisconsin |
Redemption period? | Yes, the owner can repay and keep the property | Usually no; once sold, the original owner can’t get it back |
Redemption period auctions
Some states allow the original owner to “redeem” the home even after it’s sold if they pay back the taxes plus fees within a set time. This is called a redemption period. If you buy a property in this kind of auction, you might need to wait months (sometimes years) before fully owning it.
How to Find Back Taxes Properties for Sale Near You?
If you’re serious about securing great deals, you’ll need to know where to look and how to approach the process correctly.
Search County and State Tax Auction Websites
Many counties list back taxes property for sale on their websites. Start by visiting your county treasurer or tax collector’s site. Look for pages titled “tax auctions,” “delinquent property list,” or “tax sale calendar.”
States like Michigan, Indiana, and Pennsylvania also run statewide listings.
Some websites even allow you to download lists of upcoming tax auction real estate opportunities.
Attend local and Online Real Estate Auctions
Tax auctions used to happen only in courthouses. Now, many things happen online. Sites like GovEase, Bid4Assets, and RealAuction host tax sales for counties across the U.S.
You can register for free, review property details, and place bids all from your computer or phone.
Not every auction lets you inspect the property beforehand. Some properties may have code violations or damage, so you must know which ones to bid on.
Work with Real Estate Agents Specializing in Tax Sales
Some agents focus on government tax sale homes. They know where to find listings, understand auction rules, and can guide you through the process. Their help is beneficial if you’re new to real estate or want to avoid legal issues.
Pros and Cons of Buying Back Tax Properties
When you buy back tax properties, some aspects can work heavily in your favor, while others may require extra caution or planning. It’s essential to get a balanced view of what you’re stepping into.
Benefits of Investing in Tax-Delinquent Real Estate
- Low prices: Buy homes for a fraction of their market value
- High returns: Flip or rent properties for profit
- Diverse inventory: Land, homes, and even commercial buildings
- Less competition: Fewer buyers understand how tax sales work
These can become great investment properties with tax debt, especially if you’re willing to do some repairs or updates.
Potential Risks and Pitfalls to Watch For
- Hidden costs: Unpaid utility bills, liens, or repair costs
- No inspections: You often buy the property “as is”
- Complicated laws: Rules vary by state and county
- Redemption periods: You may not get full ownership right away
Always research the property title and local laws to ensure compliance. If possible, consult a CPA or lawyer who specializes in tax delinquent properties.
Step-by-Step Guide to Buying Back Tax Properties
Before bidding on a property, it’s essential to know what to expect so you can make confident, well-informed moves instead of costly mistakes.
The sections will break everything down clearly and help you take the right next step with ease.
Understand Your State’s Rules
Every state has its own laws about tax deed sales and tax lien homes for sale. Some sell tax liens. Others sell the property. Some offer a redemption period; others don’t. Look up your state’s tax sale process through your local county website.
Choose the Type of Sale You Want
Do you want to earn interest or own property?
- Tax lien sale: You get the right to collect interest from the property owner.
- Tax deed sale: You buy the property outright. Pick what works best for your goal.
Research Tax-Debt Property Listings
Start by getting the list from your local county or online auction site. Look for:
- Property address and owner
- Amount of tax owed
- Auction date
- Type of sale (lien, deed, or redemption)
Use tools like Zillow or Redfin to estimate market value.
Do Property Research
Once you have chosen the property to bid on, use these tips:
- Drive by the property if it’s close (don’t enter).
- Look at Google Street View, county GIS maps, parcel viewer tools, or satellite images.
- Check if it’s in good condition, has a suitable location, good curb appeal, and a desirable neighborhood.
- Contact the county to verify if there are any additional liens or unpaid bills.
Drive by the property if it’s close. Check for condition, location, and curb appeal. Never bid blindly
Bidding at Tax Auctions
Each county has its own auction rules. Read the fine print. Find out:
- Is it online or in-person?
- What’s the minimum bid?
- Is cash required?
Register early to avoid missing the opportunity to bid.
On the day of the auction:
- Arrive early or log in on time
- Bring ID and deposit (often 5–10%)
- Stick to your budget
- If you win, pay the full amount promptly, typically within 24–72 hours.
Winning bids usually require immediate or next-day payment.
Closing the Deal and Securing Ownership
After you win:
- Get the deed or lien certificate from the county
- Wait for the redemption period (if any)
- If no redemption, the property becomes yours
- Record your deed with the county clerk
- Hire a title company or real estate attorney to check for leftover liens
Now, you legally own the property.
By following these steps, you can safely buy property with back taxes and turn it into a smart investment. Take your time, conduct thorough research, and stay compliant at every step.
Bonus Read → How to Reduce Capital Gains Tax
Invest Smarter with Hopkins CPA Firm
Buying back taxes property for sale can be a smart move if you know what you’re doing. If you don’t have time to study the laws or research each property, Hopkins CPA Firm is here to guide you.
We delve into local laws, uncover hidden liens, and ensure your investment is safe from day one. From research to closing, we handle the heavy lifting while you focus on building wealth.
This is your chance to grab hidden real estate deals that most people overlook. Book a consultation call with Hopkins CPA Firm now!
FAQ
What happens when property taxes aren’t paid in the U.S.?
When property taxes go unpaid upon multiple notices, the local government places a lien on the property.
- If taxes remain unpaid, the lien may be sold at auction to investors (tax lien sale) or the property itself may be sold (tax deed sale).
- The homeowner typically gets a redemption period to repay the debt and keep the home.
- If they don’t repay, they can lose ownership of the property.
This process helps counties recover lost tax revenue.
Can you live in a home bought at a tax sale?
Yes, but not always immediately.
- If it’s a tax deed sale, you may be able to move in after clearing legal hurdles.
- If it’s a tax lien sale, you must wait through the redemption period before taking possession.
- You may need to file for foreclosure if the owner doesn’t repay.
Always check state laws before trying to occupy the property.
Tax lien vs. Tax deed sales—What’s the difference?
- A tax lien sale sells the debt; you’re buying the right to collect unpaid taxes plus interest.
- A tax deed sale transfers ownership of the property due to unpaid taxes.
- In lien states, the owner can reclaim the home by repaying you.
- In deed states, you may become the legal owner right after the sale.
How to locate tax-delinquent homes in your state or county?
Here are some ways to locate tax-delinquent homes in your area:
- Start by contacting your county tax office or treasurer’s office.
- Check official county websites by searching “[Your County] tax deed sale” on Google.
- Some states list delinquent properties on government portals or third-party sites.
- You can also find directories on sites like Tax Lien Code or Property Leads.
- You can also visit local courthouse records for lien or deed information.
- Sign up for email alerts or tax sale calendars in your county.
Can you finance a tax sale property in the United States?
Traditional mortgages are rarely available for tax sale properties. Many sales require full payment upfront, often in cash or certified funds.
However, some investors use personal loans, private lenders, or hard money lenders.
Financing may be possible after you win the property to renovate or refinance. Always check auction rules and lender terms before bidding.
