Latest Facts and News
- Florida offers up to 18% interest on tax lien certificates.
- Over 1 million tax lien certificates are available annually in Florida.
- Auctions are held online, making it accessible for both local and international
investors. - Florida operates with a reverse auction system, where the interest rate is bid down.
- Tax deed sales extinguish most liens, including HOA fees
Every year, thousands of Florida property owners fall behind on their taxes, creating opportunities that attract eager investors looking for high returns or potential real estate deals.
But without the right knowledge, learning how to buy tax lien properties in Florida can quickly turn into a costly mistake. Many investors enter the market without grasping Florida’s unique auction system, redemption periods, and legal processes, leading to wasted money, excessive paperwork, and no returns.
But don’t worry!
This guide simplifies the process, explaining Florida’s reverse auction system and providing a step-by-step method for purchasing tax lien properties. Whether you’re new or experienced, you’ll learn how to research, bid wisely, and avoid costly mistakes.
Let’s get started.
What Are Tax Lien Properties in Florida?
| In Florida, a tax lien property refers to real estate on which the owner has failed to pay property taxes, resulting in a legal claim by the government against the property. |
To collect the unpaid taxes, the tax collector organizes an auction where people can buy tax certificates. If the taxes still aren’t paid after that, the tax collector can hold another auction to sell the actual property.
Definition of Tax Lien Certificates
A tax lien certificate is a legal document issued by the county tax collector when a property owner in Florida fails to pay their property taxes. This certificate represents the unpaid tax amount, along with any interest and fees.
Investors can purchase these certificates, essentially covering the owner’s tax debt. In return, they earn interest on the amount they paid. If the property owner does not repay the debt within the designated two-year period, the investor may have the opportunity to acquire the property through a tax deed sale.
Let’s understand how the auction process works in detail→
How Do Tax Lien Auctions Work?
Before we get into how to buy tax lien properties in Florida, let us first understand how tax lien auctions work in Florida.
The process of real estate auctions is as follows:
Step 1: Registration
- Investors must sign up on the auction platform for their country in advance which starts in early May. The auctions are conducted online through a website called RealAuction.
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Step 2: Bidding Process (Reverse Auction System):
In this system, the bidding starts off at a high interest rate of 18%. Investors then compete by lowering the interest rate. At last, the certificate goes to the investor who agrees to the lowest interest rate. The minimum interest rate an investor can earn is 5%, unless they bid 0%, in which case they earn nothing.
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Step 3: Certificate Issuance
Tax certificates are grouped in batches, closing hourly on auction day. Investors can place, edit, and remove bids until the certificate is awarded. Once the auction ends, the winning bidder has to pay for all awarded certificates.
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Step 4: Redeeming the Certificate
To remove the lien, the property owner must pay the delinquent taxes, plus interest, fees, and advertising costs, to the Tax Collector. Once payment is received and validated, the investor is reimbursed their initial investment plus interest, and the lien is removed.
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Step-by-Step Process to Buy Tax Lien Properties in Florida
Investing in tax lien properties in Florida follows a clear legal process. Here’s a step-by-step guide on how to buy tax lien properties in Florida:
Step 1: Research Available Tax Liens
Before participating in a tax lien auction, investors should research the properties up for grabs and understand the specific rules for each county. Where to find tax liens:
- Florida Tax Lien Auction Sites: Every county in Florida administers its own tax lien auction. Investors use the county tax collector websites to view tax lien certificate listings. You can check websites like Sarasota County Tax Collector, Florida Tax Collectors Association, and Florida Department of Revenue for detailed information on tax lien sales.
- Over-the-Counter (OTC) Certificates: If a tax lien certification auction does not sell, the county may then offer to buy directly from them as one county-held certification. For instance, St. Lucie County lists available OTC tax certificates.
Step 2: Attend a Tax Lien Auction
Attend a tax lien auction to purchase Florida tax lien properties. And this one, you need to reserve ahead of time through an easy process:
- Go to the website of your county’s tax collector to register for the tax lien auction. For instance, Duval County has a website where you can participate in the online tax certificate sale.
- Some counties might ask bidders to pay a refundable deposit before they can join in.
- Make sure to check out the list of tax liens available and do your research on the properties.
Step 3: Bidding at Auction
In Florida, the bidding occurs following a reverse auction system where investors try to compete by offering lower interest rates they are willing to accept. It starts from a high of 18% per year.
It starts from a high of 18% per year.
The lowest eligible interest rate, as low as 0.25%, gets the tax lien certificate. Where multiple bidders submit the same lowest rate, the auction system randomly selects the winning bidder
| Know That→ While bidding low increases the chance of winning, setting the rate too low reduces the potential return on investment. |
Step 4: Post-Auction Procedures
When an investor gets a tax lien certificate, there are certain steps they need to take to handle their investment.
- Certificate Issuance: The tax collector’s office gives the tax lien certificate to the person who wins the bid.
- Redemption Period: The property owner has two years to repay the delinquent taxes along with interest. If the owner pays off the lien, the investor receives the original amount plus the interest they agreed on.
What Happens After You Buy a Tax Lien Certificate?
When you buy a tax lien certificate, you’re basically covering the property owner’s unpaid taxes. In return, you get the chance to collect that money back with some interest. But keep in mind, this doesn’t mean you own the property right away. The owner still has a legal chance to pay off their debt.
Redemption Period
When someone buys a tax lien certificate, there’s a specific time frame, called the redemption period, where the property owner can pay back the overdue taxes plus interest to keep their property.
The redemption period is two years, during which, if the property owner pays back the taxes and interest, the investor loses their claim on the property.
In the meantime, the investor earns interest on what was agreed upon at the tax lien auction. In Florida, the interest can go up to 18% each year, but the actual rate depends on how the bidding goes.
Applying for a Tax Deed
If the property owner does not pay off the lien in the allotted two years, the lien holder may begin the process of transforming the property tax lien certificate into ownership of the property. They can do this as follows:
- Tax Deed Application: Once the two-year waiting period has passed, the lienholder can head to the county tax collector in order to apply for a tax deed. This starts the process of selling the property at a tax deed auction to get back the unpaid taxes.
- Auction Process: The county will set up a tax deed sale where people can bid on the property. The starting bid usually covers the total amount of tax owed plus any extra fees.
- Take Over the Property: If no one makes a bid on the property in the auction, the lienholder can potentially acquire the property. But they may have to take secondary legal steps to obtain a clear title to the property, such as a quiet title action.
Risks and Rewards of Buying Tax Lien Properties in Florida
Having learned how to buy tax lien properties in Florida, you need to know a few risks and rewards involved with it. These are as follows:
| Potential Risks | Potential Rewards |
|---|---|
| Property Acquisition at discounted prices: The property may have issues affecting its value or hidden repair costs are possible. | Property Acquisition at discounted prices: There is potential to acquire valuable properties below market value. |
| Extra Costs: Unpaid bills, maintenance, and legal fees add up. | Immediate Ownership: No long wait times like traditional real estate. |
| Surviving Liens: Some liens, such as certain government liens, may survive the tax deed sale, like HOA dues and fines. | Cleared Tax Liens: Past-due property taxes are wiped out. |
| Marketability: Acquired properties might require legal actions, like a quiet title action, to clear the title before selling. | High-Interest Returns: You can earn up to 18% interest on your investment. |
Legal Considerations When Buying Tax Lien Properties in Florida
It’s important to understand legal considerations and tax laws before buying tax lien properties in Florida. Below are some of the considerations:
Understanding Florida’s Tax Laws
Chapter 197 of Florida Statutes governs tax collections, sales, and liens. Some key legal points are:
- Tax Lien Sales (FS 197.432): Florida counties sell tax lien certificates at public auctions when property owners fail to pay property taxes. These certificates collect interest, and the owner must pay the lienholder to clear the debt.
- Notice to Lienholders (FS 197.522): A tax deed sale requires notification to all parties holding an interest in the property (i.e., mortgage holders, other lienholders) and an opportunity to redeem the lien. Failure to notify lienholders properly can result in legal challenges.
Quiet Title Action
Once the deed sale properties have been acquired, the next step includes filing a Quiet Title Action.
Thus, if there are no claims on the title, it guarantees clear ownership of that property. Otherwise, previous lienholders or other parties may still have some legal basis to contest ownership of your property.
Make Informed Decisions on Property Tax Liens
With Salinger Tax Consultants →
Tax lien properties in Florida could be an excellent investment with a high-interest return and create ownership. However, it requires an extensive amount of research and knowledge of the Florida auction process, as well as about the legal risks like redemption periods, pre-existing liens, and the quiet title process.
Tax lien certificate investing can be a great source of money, but it has its own risks. Plus, unpaid tax liens can also put pressure on property owners financially. Salinger Tax Consultants can offer a solution for tax lien issues, back taxes, or IRS negotiations.
Expert guidance can, either way, make the difference for you, whether you are an investor looking for opportunities or a property owner seeking solutions.
Contact Salinger Tax Consultants today to explore your options.
FAQs
What is the difference between a tax lien certificate and a tax deed?
A tax lien certificate lets you collect unpaid taxes (with interest) and place a lien on a property. In contrast, when an investor purchases a tax deed, they are purchasing the property itself because of unpaid real estate taxes, typically at an auction. This happens through a tax deed sale.
How long do I have to wait before applying for a tax deed?
To apply for the tax deed to a property in Florida, you must hold the tax lien certificate for a minimum of two years from April 1 of the certificate issue year.
Can I buy tax lien properties over the counter in Florida?
Yes. If a tax lien does not sell at auction, it becomes a county-held certificate and is available for purchase over the counter (OTC). These can often be acquired at a fixed interest rate of 18%. Investors can check county tax collector websites to find available OTC liens.
What happens if no one bids at a tax lien auction?
In cases when no one bids on a tax lien at auction then a certificate is issued to the county at the highest interest rate of 18%. These county-held certificates remain available for OTC purchase. In some cases, if taxes go unpaid, the county will eventually transfer the property to a tax deed sale.
Do I need an attorney when buying tax lien properties?
Even if you intend to purchase the property through a tax deed sale, hiring an attorney is not mandatory, although it is highly recommended. Attorneys can help:
- Navigate title issues
- Handle quiet title actions to remove claims against the property
- Ensure compliance with Florida tax laws
