Using a self-directed IRA to invest in tax liens

Tax Deeds Gaining Traction

Property taxes continue to grow in thousands of counties across the country. In order to fund the necessary county services, many states collect delinquent property taxes through tax lien and tax deed auctions. Each state holds these auctions a bit differently, but in all cases these tax deeds or tax liens can be purchased within a self-directed IRA.

Tax Liens vs Tax Deeds

Tax Lien

Instead of selling the actual property, the governmental entity sells a lien on the property. The lien is generally for the amount of delinquent taxes, accrued interest, and costs associated with the sale. These sales differ from state to state. For example, in Florida the tax liens are auctioned off, starting at a rate of 18% then lowering with each subsequent bid.

Tax Deed

The property itself is sold, often at the rate of the property taxes owed plus costs and interest. There may be a provision in the state law for a redemption period after the sale should the property owner wish to exercise such an option.

Why Purchase Tax Liens in an IRA?

NuView offers a fast turnaround time

Because many tax liens are redeemed within a short time period, there can be a significant advantage to accrue these gains in a tax-deferred retirement account rather than taking the gains personally at the current income tax rate.

Through a NuView self-directed IRA, accountholders can have their IRA open an account with a local bank to enable online bidding and ACH funds transfers. The accountholder provides an accounting of the purchases to NuView, and the valuation of the IRA is properly maintained. While NuView offers a fast turnaround time on processing investment transactions, please note that, because different states have different tax lien and deed rules, investors should allow up to three (3) days to purchase the lien or deed.

Buying Tax Deeds within an IRA

Step OneSet Up
1) Set up and fund a NuView self-directed IRA

Step TwoIdentify
2) Identify the tax deed or lien whether to invest via live auction or online

Step ThreeSubmit
3) Inform NuView and specialists will assist through the purchase process

What Happens Next?

When an investment tax deed or lien is redeemed, the funds are automatically deposited into the IRA account. State laws govern what happens should the lienholder not be paid within the prescribed time. All funds received through redemption are tax deferred and available for additional tax lien or other self-directed investments.

Open an account today!