Purchasing Tax Liens And Tax Deeds In Your Self-Directed IRA

Tax liens and tax deeds are a great way to build your retirement when you do not have a large amount of funds to work within your retirement account. In most states, tax lien and tax deed rights are sold if the owner is delinquent of the property taxes, in the form of a tax sale certificate. When purchasing these certificates it gives you the right to foreclose and to obtain the property. It also allows you to obtain possession of the property by way of court eviction, for the intent to reside in, lease, rent or dispose of the property at will if the back taxes are not paid in a specified period of time. If the owner wants to redeem his or her property by paying the overdue taxes plus interest, he or she may do so before a certain time to prevent foreclosure or eviction.

With all self-directed accounts, these types of investments will be held in and titled to the IRA. Although there are a few challenges when trying to purchase these type of investments, it can be done and working with your custodian to overcome them is key. There are investment request forms needed and ways to get your funds available to you for a quick turnaround. Only because the window is short when looking to invest in tax liens and deeds. Tax liens and deeds are a way to build your retirement, with returns ranging from 18-50%, in most states.

Each state and or county has their own set of rules and you want to be versed in them before taking on the investment. For example, in Florida the tax liens are auctioned off starting at a rate of 18% then lowering with each subsequent bid. Visiting the property as well is a good idea, if applicable. You should always do your due diligence before purchasing any investment. You can find more information about your state or states you plan on investing in usually through the County Clerk’s website.

Tax Liens and Tax Deeds are just one of the alternative assets you can invest in using your self-directed IRA, which allows you a better return on your money.

Written by Eric Hernandez