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Delinquent Tax Sale Rebuilds County's Accounts

07th December 2010
By Brent Crouch in Taxes
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Throughout the state, there is a common problem that is also being faced in many areas around this country. There are properties facing foreclosure. This is not always because the mortgage payments are late, but rather that the owner or owners have failed to pay taxes.

The good news for government agencies is that these foreclosures can help collect on the lost tax income. By selling the tax liens to interested investors, the government regains a portion of the lost income. Often those taxes can be very long overdue. Homeowners can rack up serious tax debt before the government goes to the extreme of selling tax liens, which means the debt tied to them is typically substantial.

This is true of Butte-Silver Bow County, where similar sales have been happening. There were nearly fifty properties that faced tax liens in the county in the past year alone, simply because of people failing to pay property taxes. Individuals and companies, like the Pacific Land Holding LLC, move in to buy up those tax liens and often make big profits in the end.

This company alone bought up the tax liens on sixteen of those previously mentioned properties. As a result, the homeowners are responsible for payments plus interest to the new owner of the lien and if they don't pay, then the property becomes the property of the lien owner.

Why are investors so willing to buy often risky liens? The answer is always the potential payout. The purchases made at delinquent tax sales can turn out to be gains well above those offered by banks, with less risk than what many consider the stock market to carry right now. In the poor economy, as more are failing to pay taxes and alternative forms of investment carry excessive risk or low returns, delinquent tax sales are gaining popularity.

However, more important than the returns secured by investors is that governments are able to collect on lost funds. As a result, the promised tax dollars meant to be spent on schools and government agencies are actually there is spend.

A spokesperson for Pacific Land Holdings, LLC went so far as to say that it makes a bigger impact on those who have failed to pay taxes to receive a letter from the private agency. Often, it makes the homeowners take a serious look at the situation and to find the money needed to save their home and repay their owed debt.

It saves the government the time and hassle of contacting the home owners over and over again. It's a win-win situation for the county and the investor.

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