Thursday, April 4, 2013

Tax Certificates, A Wonderful Investment.

     Do you have a few shekels that you would like to invest?  Maybe you have a hundred dollars.  Maybe you have a  hundred thousand dollars.  Whichever is closer to your truth, here is a golden opportunity.

     Property taxes in Florida are delinquent on April first.  Shortly after that date, in every county in Florida there is a tax certificate auction.  At the tax certificate auction, the county tax collector auctions off a certificate for the amount of the taxes.  The price is the amount of the taxes.  What you are bidding on is the interest rate that you will accept.  The bidding starts at eighteen per cent and bids down .

     Here is an example.  A British gentleman comes to central Florida and pays cash for a vacation house.  He goes back to the UK.  When he gets back to the UK, he moves his residence and fails to file a forwarding address with the post office.  For whatever reason, he doesn't pay his 2012 property taxes. His taxes are $1000.  His taxes become delinquent on April 1 2013.   On May 31, 2013 you bid on his tax certificate.  You are the low bidder.  You pay the county tax collector the thousand dollars and you get a tax certificate.  If there are any liens on the house, property taxes are superior to all other liens.  Let's assume you won the bid at six percent. 

     A year goes by.  Mr. British does not pay his taxes.  Another year goes by.  He still has not paid his taxes.  Three years go by.  He has still not paid his taxes.  You are accruing interest at a rate of six per cent.  Another year goes by.  Another year goes by.  Mr British decides to sell his house.  He finds a buyer.  When the closing attorney does a title search, he discovers that the taxes have not been paid for five  years.  Mr British pays his taxes now and you get your thousand dollars plus six per cent interest for five  years from the tax collector.  This is not the most liquid investment that you can find.  It is very safe.  It is safer than the stock market.  If you want more detail in Florida . 

     The delinquent list for 2012 will be in the Orlando Sentinel on May 13, 2013 and May 20, 2013 and May 27, 2013.  Buy some tax certificates.  You can buy one for fifty dollars or you can buy one for fifty thousand dollars.  Different counties have different times.  Check in your county. 

     In Florida you can only hold a tax certificate for seven years.  After you have owned the certificate for two years, you can request that the tax collector, foreclose on the property.  When that happens the property is sold to the highest bidder for cash at a tax deed auction.  You can bid if you like.  Whether you bid or not, you tax certificate plus interest will be paid to you by the tax collector. 

     This is the time of year for buying a tax certificate.  Contact your tax collector.  Get the details. Go buy some certificates.  Your stock broker is the only person that won't like this idea.

     If we can help......

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