A Few Things About Tax Liens as an Investment Opportunity


Retirement planning is easy when you know what savings account to choose and why. Do you have a Solo 401k account? It can be a self-directed IRA LLC or a Solo 401k. Many small business owners opt for Solo 401k for ease of use and vast investment options. You can invest in stocks, bonds, and much more. And if you have heard about tax liens but have yet to try one, this is another category to explore with your funds. You can buy tax liens immediately, and taxes apply on withdrawals. If you still need to, you can create a Solo 401k plan to benefit from its contribution limits. Choose a trustworthy provider.

Once you have a self-directed plan, you can plunge into the tax lien sphere. You can look at solo401k.com for assistance. Here are some quick insights about tax liens.

Overview of tax liens

When a property owner doesn’t pay property taxes, the government can seize the property and put it on auction for hundreds of dollars. Due to this, solo 401k investors, even with low funds, can find tax liens affordable. They can earn as much as 12-16% returns a year. You can search for these with local tax bodies or online. It will help you discover all the delinquent properties in your city and the time and date of sale. As hinted, you must pay the amount in 48 hours. You are your solo 401(k) trustee. Visit a bank and get the cashier’s check using your account name.

Once you get the lien, you will keep it until the original property owner clears the taxes. The money will enter your solo 401k account. However, you can take the property title if the delinquent status remains. It will use the trust’s name, though.

Types of tax liens

Tax Lien Deed and Tax Lien Certificate are the two options. The second option allows the property owner to retain its ownership. They take money from third parties to clear the taxes and buy more time to clear the debt. If you invest in a tax lien certificate, you lend the homeowner an amount to pay the due tax amount. In return, the homeowner agrees to repay borrowed money with interest within a stipulated time. If the property owner fails to abide by the terms, the deed gets transferred in your name. So, both situations are profitable for you.

However, participation in a tax lien deed can be a different game. You buy or bid for the auctioned property without anything to do with the homeowner. You can do anything with the property – renovation, sale, or rebuilding. If your offered price gets acceptance, you get the deed. Since it’s a costly investment, your profit margins can be lower. The main thing is it frees you from worries about the homeowner.

Real estate investments have always been attractive. If you want your retirement savings to grow decently without much risk, it can be one of the best domains to consider. Still, study your options well. Talk to your financial advisor if you wish. Self-directed Solo 401(k) lets you control your checkbook so that you can make the most of it with proper knowledge and guidance.

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