Buying Home That Is Behind On Back Taxes

Q: There is a program on television once a week. The host of the show tells viewers that they can buy any home that is behind on back taxes for the amount of taxes that is owed. Is this true?
 

A: Technically, yes. All homeowners must pay their real estate taxes each year. If you don’t pay your real estate taxes, the tax collector can seize your house and sell it for the back taxes that are owed.

In most places, the taxes have to have been unpaid for at least a year or two and the homeowner has the right to catch up on the taxes by paying the interest that has accumulated plus any penalties or fees.

In general, if the homeowner fails to pay the back taxes owed in the specified period of time, these properties are typically sold for the back taxes, and anyone can buy them.

But there’s a catch (you knew there would be!). Once you have bought a house by paying the back taxes, there is a period of time where the homeowner has the right to catch up with the payments and pay you back your investment plus interest. If that doesn't happen, you own the property free and clear and can evict the former homeowner (if they’re still living in the property).

For more details, talk to your local sheriff's office or municipal government office in your area that handles the tax sales or find a real estate attorney who works with real estate investors who buy properties this way. The sheriff’s office typically sells property that is behind in real estate tax payments, and should be able to provide you with the information you need to start playing this game.

A word of warning: It’s been my experience that folks who cannot afford to pay their real estate property taxes also don’t have the money to make their mortgage payments (if they have a loan on the property) or maintain their property.

While it may seem as though you’re picking up the property for very little cash, you are likely stepping into a quagmire. Some savvy people have done very well in this area but others have found out that the bargain they thought they got was really a lemon.

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