You don’t have to wait for an annual auction to buy tax liens. Counties offer their unsold tax liens for sale year round. Many county tax collectors and county treasurers provide a list of their available tax liens on their websites. You can use the websites of tax collectors and county property appraisers to conduct your due diligence. If you find a tax lien you want to buy, you can send your payment to the tax collector and receive the tax lien by mail.
Choose from one of the following states that allow their county tax collectors to sell tax liens by mail: Alabama, Arizona, Arkansas, Colorado, Florida, Maryland, Mississippi, Montana, Nebraska, New Jersey, South Carolina, South Dakota, Tennessee, Texas and West Virginia. Tax lien interest rates vary from state to state. For example, Florida tax liens pay 18 percent interest while Montana tax liens pay 10 percent interest.
Select a county that interests you. Go to the website of the tax collector or the treasurer. Find the list of tax liens currently owned by the county. The tax liens are listed by the property appraiser’s parcel identification number. To get information about the underlying property, open a new window in your web browser. Go to the county property appraiser’s website. Find the property search page. Type in the parcel ID number as listed on the tax lien and press the search button. The search will return the parcel’s information along with a map showing the parcel’s location.
Decide which tax liens you want to buy. Contact the county tax collector and ask for the total amount that’s due to purchase the tax lien. Many tax collectors have forms you must complete to transfer the tax lien’s ownership from the county to you. For example, you must complete the Tax Certificate Holder Information form and IRS Form W-9 -- "Request for Taxpayer Identification Number and Certification" -- to purchase tax liens in Osceola County, Florida. Send a cover letter itemizing the tax liens your are purchasing, the completed tax collector’s forms and the payment to the tax collector. The tax collector will send the liens to you shortly after receiving your payment.
- Ask the tax collector what forms of payment are accepted, such as a personal check or a money order.
- Tax liens do not pay regular interest payments. The interest accrues until the lien is redeemed by the property owner. Don’t invest in tax liens unless you can afford to have your money tied up indefinitely.
Based in St. Petersburg, Fla., Karen Rogers covers the financial markets for several online publications. She received a bachelor's degree in business administration from the University of South Florida.