Mastering Property Tax Liens: An Investor's Edge in Real Estate

Mastering Property Tax Liens: An Investor's Edge in Real Estate

4 min max read

If you're a real estate investor, your ears are likely to perk up once you hear the term 'Property Tax Lien.' This is one concept that every investor, regardless of their level of experience in real estate investing, should understand and closely consider. But what exactly is a tax lien against a property, and what does it mean for real estate investors? Let's dive in.

What is a Property Tax Lien?

A property tax lien is a legal claim against a property, instated due to the owner's unpaid local, state tax, or federal tax lien. When a property owner falls behind on their tax payments and they become delinquent, the government issues a lien to secure the amount of taxes owed. The government has the right to claim the property if the taxpayer does not make the tax payment, along with interest and penalties, within a specified time.

It's important to note that a property with a tax lien can be a risky affair, but also an opportunity. In real estate investing, savvy investors often use these situations to acquire properties at a discount, sometimes through real estate tax auctions.

Understanding Tax Liens

Tax liens are among the few debts that even bankruptcy can't put off. The lien stays attached to a property until the overdue taxes are fully paid, or the property is sold to cover the delinquent property taxes. This leads us to real estate tax auctions, where properties under tax lien can be sold to recover the owed amount.

These property auctions are a crucial facet of real estate investing, providing enormous opportunities for investors looking for properties at below-market rates. Nonetheless, the competitive nature of these auctions and the due diligence required make it not for the faint-hearted.

Importance of Property Tax Liens for Real Estate Investors

Real estate investors see opportunities where others see challenges. While a property tax lien may seem like an issue for the property owner, for investors, it can offer a chance to step in, relieve the burden of delinquent taxes, and create a win-win scenario. The critical thing to remember is the potential risks and rewards that come with acquiring properties under a tax lien. Doing your homework is necessary to ensure you don’t inherit a higher-risk property than anticipated.

Finding Tax Delinquent Properties

Utilizing County Websites

For real estate investors, county websites are invaluable for unearthing tax-delinquent properties. These local government websites provide public records, offering a treasure trove of information on properties with outstanding tax liens. By accessing these websites, investors can find detailed listings which typically include the property's location, the amount of unpaid tax, and the duration of the delinquency.

This direct approach is highly beneficial, as it allows investors to identify potential investment opportunities within specific regions or neighborhoods. Many county websites also offer advanced search features, enabling users to filter properties according to various criteria, making the search process more efficient and targeted. Utilizing county websites is a great way for investors to begin their hunt for tax-delinquent properties, laying the groundwork for potential lucrative investments.

Finding Tax Delinquent Properties on DealMachine

You can also easily pull a list of properties that have been flagged as tax-delinquent on DealMachine. These lists can be filtered down to specify not only if the property owner was delinquent on taxes, but also what year they were delinquent. You can also view the property data exactly how much the taxes were on the property.

Along with the tax information, DealMachine offers a wide variety of data points on properties, such as other liens, lot information, and unlimited contact information on all properties. There are over 700 data points that you can use to fine-tune your lists. DealMachine is a great way to get the power of real estate investing at your fingertips.

Making Profits from Property Tax Liens

Real estate investors often profit from tax liens by either buying the lien and earning interest on it or by purchasing the property outright at the real estate tax auctions, often for less than its market value. Keep in mind, that thorough research and understanding of the property and lien are necessary before making such a move.

How can Tax Liens affect the Real Estate Investment Scenario?

Property tax liens can influence the real estate market both positively and negatively. On one hand, they offer investment opportunities with significant price reductions. But, on the other hand, due to potential underlying issues, they can bring unanticipated complications and expenses.

Ways to Counteract a Property Tax Lien

Paying off the lien is the simplest way for property owners to deal with it. However, for those who cannot pay their property taxes, investors have a chance to step in.

Investors can pay the lien amount, freeing the owner from the burden, while securing the property or earning interest when the owner pays off the lien. Another option for investors is investing in tax lien certificates. Purchasing these certificates at auctions allows investors to own a claim on the property, earn interest from the owner, or eventually end up with the property if the owner fails to pay off the lien.


In conclusion, a property tax lien can be a game-changer in real estate investing offering a wealth of opportunities. However, navigating this terrain requires a deep understanding of local legalities, comprehensive research on properties, and considerable risk assessment and management skills. Remember the golden rule: Fortune favors the prepared, especially in real estate investing.

Samantha Ankney

About Samantha Ankney

Samantha has been a media specialist for DealMachine for 2.5 years. She produces, edits, writes, and publishes all media that is distributed to the DealMachine and Real Estate Investing community.