Tax Liens vs Tax Deeds, what’s the difference?

Tax Liens vs Tax Deeds: If you’re a property owner, then you need to know what happens when you do not make your payments on your Real Estate Taxes. Depending on the state or county, it will either be a Real Estate Tax Lien or Tax Deed. A tax lien gives a party the legal right to collect money that is owed from a property. This includes any proceeds or value from the sale of said property. A tax deed is when someone defaults on their property taxes and as such, loses ownership rights to the government entity that put the lien in place.

Think of the tax deed referring to the property itself while a tax lien is an investment instrument representing the right to collect unpaid taxes on that property if the prop-

Tax Liens

When you invest in a tax lien, you are essentially paying someone else’s delinquent property taxes. In return, you can earn an exceptionally high rate of return on your investment.

Tax lien certificates offer much higher interest rates than what is typically found at a bank. Arizona, for example, pays up to 16% while Florida and Illinois both pay 18%. In some cases, you could even earn up to 36%.

By investing in a tax lien, you are not buying the property. The original owner of the land still lives there and has the chance to pay off the back taxes plus penalties, which would then redeem the certificate.

The county will reimburse you for your initial investment plus interest at a high rate after the property owner pays them. The great majority of property owners usually redeem the certificate.

Tax liens are a type of investment that is guaranteed by the government, making them low-risk. If the property owner does not redeem their certificate, then the investor has the right to foreclose on said property.

Tax Deeds

A tax deed is a document that grants ownership of a property to the government when the property owner doesn’t pay their taxes.

When you purchase a tax deed, you’re buying the property outright.

Tax Liens vs Tax Deeds, what’s the difference?

If you live in a tax deed state, the county treasurer will eventually seize your tax-delinquent real estate. They will evict you from the property and sell it at a tax deed auction to the highest bidder.

Since all the treasurer wants is money for outstanding taxes, they heavily discount properties up for sale. The bidding usually starts near 10%, 20%, or 30% of what is owed in unpaid taxes.

Tax Deeds vs Tax Liens

What is the difference between a tax lien and tax deed investing? Both tax liens and deeds are sold at public auctions or online, but only deeds transfer property ownership. With a tax lien, you’re simply claiming the unpaid taxes as your own.

What is the difference between a tax lien and tax deed investors? Tax lien certificate investors are looking for a secure, high-yielding investment with minimal risk involved. They want to earn passive income at rates of return that outpace inflation. Tax liens also appeal to investors with more limited capital since certificates can be sold in a wide range of amounts to suit every budget.

Tax Liens vs Tax Deeds, what’s the difference?

Tax liens and deeds can be highly rewarding investments with varying levels of risk involved. While both offer attractive returns, investors should consider their personal objectives before making a decision. By carefully researching all options available, any savvy investor has the potential to earn significant returns in either type of investment. With the right mindset and dedication to research, tax lien and deed investing can help you achieve your financial goals faster than more traditional methods like stocks or bonds. Furthermore, they are relatively low-risk investments that are largely backed by government entities, so they pose much less danger than other alternatives available in today’s market. With thoughtful consideration and knowledge, tax lien and deed investing can be a lucrative venture for any investor.

Tax liens are secured by the government, while a tax deed transfers ownership of the property from the delinquent taxpayer to one who acquires it at auction or online. Both offer attractive returns but require careful research into each option before deciding which is best for your financial goals and risk tolerance. Tax lien and deed investing can be a highly rewarding venture for any investor who puts in the work. With thoughtful consideration, insight, and research, it is possible to achieve great financial success with either type of investment. Investing in tax liens or deeds can provide you with diversified returns that outpace inflation while helping you secure your financial future.

In contrast, tax deed properties are much more appealing to investors hoping to make a quick profit. Because these types of property come with inherent large profit margins, anyone knowledgeable about real estate can make quite a bit from reselling just one tax deed.


By understanding the differences between these two popular types of investing, potential investors can make an informed decision about which type of investment will fit their individual needs and circumstances best. With some due diligence and knowledge of the market, anyone interested in either type of investing can make a safe and profitable investment.

In conclusion, there are distinct differences between tax lien and deed investing. While each offers attractive returns, the type of investment should be tailored to the individual’s specific financial goals and risk tolerance. Investing in either can yield tremendous rewards for those who do their homework and research all available options before committing to any particular investment strategy. Ultimately, the choice should depend on an investor’s individual financial situation and goals. With some knowledge and understanding of how these investments work, anyone interested in either type of investing can make a safe and profitable decision that best fits their needs.

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