Tax lien certificates are debt instruments and one of the many examples of cash flow notes. Procuring one of these notes, which can either be bought or sold, means that the debtor will automatically owe you the debt. Notes obtained from the real estate industry are among the most popular type of notes. Investors prefer to collect them in lump-sum rather than wait for monthly payments.
A lien on a property for not paying taxes is called a tax lien certificate. Owners of a real estate have financial obligations, or a tax lien, each year. To remove the tax lien, they would have to pay the property taxes on time. The county government will allow investors to pay on the owner’s behalf if the taxes are not paid. As proof of purchase, the winning bidder will receive a tax lien certificate at the public tax lien auction.
The investor or certificate owner may expect 2 outcomes:
1. He or she may become the owner of the real estate without the mortgages and mechanics lien or
2. Every year, they will have an annualized return of 16-50% on what they paid in order to obtain the tax lien certificate.
Being the owner of this certificate means sitting back and waiting. The property owner must visit the county tax collectors office when they decide to pay their tax obligation. Here, they will repay the amount you paid to get the certificate plus interest. You will be contacted by the government and asked to return the certificate. The government will then make a check in the amount you paid to get the certificate plus interest.
Tax lien certificates are a great investment for those who are investing in foreclosures. Remember that above everything else, property taxes get paid first. These taxes are even paid before mortgages. Because of this, investing in tax lien certificates is a safe investment. It may be a good idea to see if you can invest in the certificate when you come across a foreclosure and find unpaid property taxes. Tax liens are available in every county in the United States, the most popular being in Maricopa, Arizona.
There have been a lot of changes in the past few years regarding the tax laws. One change includes the Job Creation Act of 2010, which was part of a package designed to help stimulate the economy into new growth. These changes affected the money people earned in 2011 with some of the affected areas being in worker’s gross pay and people’s pensions checks.
When creating new laws during the 2010 tax period there were also several credits that were cut including the making Work Pay credit. The various credits were extended to people who were actually employed during the year and not to those who were retired unless they had collected some form of income.
To help increase the amount of money an employed worker could take home the tax relief Act was created. This reduced the percentage of money that was taken out of a wage earner’s check for social security. This new act did not apply to people receiving pensions.
Even though the laws were created and placed into effect in 2010 they came so late in the year that they did not apply to the previous year’s taxable income. Most employees will not see the changes until they receive a paycheck in February of 2011.
Even though the amount of money withheld for social security will be less there will not be any changes made in other amounts withheld for services such as medicare.
For people receiving pension checks there usual allotment may be lowered depending on the plan used to calculate their amounts. The IRS has published several helpful guides for people who want to understand more about how these changes will affect the money they receive.
It is important for both retired individuals and those who are actively employed to review all of their financial statements pertaining to their withholdings every year to make sure they understand what changes pertain to them.
If you’re considering the type of investment you should put your retirement money into look no further. In this article I’m going to show you three reasons why the Roth IRA is the best fit for this option.
First off a Roth IRA has the ability to let you pull money or take a distribution tax free after age 59 and a half without enduring a penalty. This means whatever you have in your account is not going to be taxed. However with a traditional individual retirement account you have to pay taxes on ever dime you pull out of the account no matter what.
Second, when you consider the Roth IRA Qualifications it also has another great benefit. It also allows you to grow your money tax free as well. This means that if you see big returns in your account one year you won’t have to pay a dime in capital gains or ordinary income tax. Unlike a traditional IRA you will have to pay taxes on every single dollar you pull from the account no matter what kind of growth you get on your account.
Third and finally, a Roth IRA also allows you to pay the taxes on your retirement income up front. The reason this is better than withholding your taxes is because in your younger years as your saving you won’t usually be earning as much, and you’ll have the added benefit of other tax deductions like your children, and home interest payments which will lower your tax liability.
In the end these reasons can give you much better options to having a better retirement. However you must also know that you have to abide by the Roth IRA Withdrawal and Qualification rules in order to set up an account like this. So get started today and contact your local financial professional.