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Homeowners

What Happens When You Buy a House in a Tax Sale?

What Happens When You Buy a House in a Tax Sale?

By on Sep 12, 2019 in Homeowners, Tax | 0 comments

Real estate agents often tell their clients to simply avoid houses with tax liens filed against them. Conventional wisdom seems to suggest that they’re simply too much trouble. However, there’s also a fair amount of money to be made by buying homes with outstanding taxes. Some investors have even drawn handsome profits simply by buying liens and then profiting through the transaction. While this might seem like it’s too good to be true, crafty individuals who know how to play the system have been doing it for years. Since Success Tax Relief is dedicated to helping all sorts of taxpayers, we’ve seen our fair share of these real estate transactions. This question tends to come up quite often as a result. How Tax Sales Happen in the First Place The process that real estate agents refer to as a tax sale can take one of two different forms: Tax lien sales occur when liens are auctioned off to the highest public bidder. The bidder then has the right to collect the lien as well as any interest payments. If the original homeowner isn’t able to pay the lien, then the new owner can foreclose the property. Tax deed sales involve properties with completely unpaid taxes. When one occurs, the house itself is sold in entirety at auction. You’re not buying a lien in this case. Rather, you’re buying a physical piece of property. In either case, the taxes in question are generally related to property taxes as opposed to various fees assessed by the IRS. Collecting Money on Tax Sales If you’re lucky enough to be involved in a tax deed sale, then you should generally end up with the house you’re buying afterward. Once you’ve paid the money you bid, the house is yours. Unfortunately, things aren’t always so easy. Keep in mind that even if you do get the deed to the property, it may not be worth very much. Sometimes, homes go down in value since they were originally counted as a distressed property. Investors often see this as an opportunity to get a house at a great deal, which they then will sell at some point in the future once they’re able to file a...

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Homeowner? Find Out What You Can Deduct from Your Taxes

Homeowner? Find Out What You Can Deduct from Your Taxes

By on May 25, 2017 in Consultation, Homeowners, Tax Deductions, Taxes | 0 comments

Typically, many new homeowners aren’t aware of all of their newfound tax deductions and credits. It’s certainly something to take advantage of as owning a new home will require a grand amount of financial responsibility. Here a list of things homeowners can deduct from their next tax filing:  Property Taxes – You should get a statement from your county that states how much you owe in property taxes. However, if you’ve taken out a loan, many banks design home loans so that the homeowner has an escrow account where a percentage of your monthly mortgage is placed in that account to pay for property taxes. At the end of the year, if the amount of taxes stored in escrow exceed the amount owed, then the remaining amount is mailed back to the homeowner. It will only be the amount paid toward property taxes that can be written off on your taxes. Energy Efficient Tax Credit – The money spent on any type of energy efficient appliance can be written off. Depending on the type of appliance, oftentimes only a percentage of the money spent can be written off. Different terms apply. Other than appliances, other energy-efficient equipment such as solar panels, energy-efficient windows, metal roofs, insulation, and the like all apply. Additionally, renewable energy like sun and solar powered wind make you eligible for a tax credit. It’s highly advised to consult a tax professional for the specifics. Ground Rent— There are instances where you may have purchased the dwelling of the home, but not own the property. In such cases, you’d be obligated to pay the owner of the land rent, commonly referred to as ‘ground rent’. If you are in a mortgage or land contract where you’re obligated to pay ground rent for approximately 15 years, you will be able to write that full amount off. It’s very similar to renting a house or apartment and being able to write your monthly rent expenses off. In the case of ground rent, you wouldn’t be able to write off the principle that you paid toward the dwelling. Mortgage Interest – Whatever amount of money you’re paying in interest on your mortgage loan is the amount that you’ll be...

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