When a property stops paying property tax counties will issue a tax lien which in many states are sold at an auction. Rather than waiting for the property to be auctioned to collect the taxes due, tax liens themselves can be auctioned off called tax lien certificates.
The objective in selling these certificates is to allow an investor (rather than the property owner) to pay the property tax on a delinquent property. This benefits the county with immediate revenue and benefits the investor with a low-risk certificate that has a high-yield interest rate — which could be from 10% all the way to 50%.The basis of our tax system dates back to the foundation of our country. The system was brought over from England. The basis of a person’s wealth was land holdings. Consequently the land provided the tax assessor a method of attaching the property owner’s wealth. Real property cannot be hidden and it’s easy to assess.