The Importance of Subsequent Taxes

By dhinternational  /  April 19, 2011 / Comments Off on The Importance of Subsequent Taxes

Subsequent taxes are due on or after the tax sales are held. But did you know the importance subsequent taxes or more known as “subs” have on you being the tax holder?

There is actually no legal power where you are able to go to a deed and get its real estate if the subsequent taxes are not yet fully paid. But really, what would be the consequence of not being able to pay off the subsequent taxes when they are in due?

Well, there is quite a number of jurisdictions wherein your neglect to pay off the subs can put you at risk as a tax lien holder especially if the property has not yet been redeemed. Take the state of Arizona for example, failure to pay off your subs can surely hurt your position and a new tax lien will then be sold and its buyer will then have the right to redeem which will eventually remove your opportunity to get the property if the lien won’t be redeemed. This is just one of the most common cases.

Now, there are also situations where the preceding owner has the right to purchase the sub lien which will then give you the chance to trade up the return. Let’s take an example: If you buy a tax lien in NJ at a 6% yield and you have the prior lien at the next year, it is then okay to purchase the new lien at 18% by custom. This system works at several states where bidding is for the ownership percentage.

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