A tax lien is often filed by a local government against a property owner who has failed to pay property taxes. The most obvious example of this is a tax lien. Also, in the event of a foreclosure, your tax lien results in you successfully acquiring the property. Normally, if you have equity in your property, the tax lien is paid (in part or in whole depending on the equity) out of the sales proceeds at the time of closing. Tax debts are different than other types of personal debt, in that they are attached to the real estate, no matter who owns the real estate. Counties across the United States charge real estate taxes. Tax liens offer many opportunities for you to earn above average returns on your investment dollars. There‘s also the "super lien," which involves being behind on homeowner association fees. You can potentially hit the jackpot with a minimal investment in a tax lien, resulting in you becoming the property owner. Tax liens: Tax liens are filed due to unpaid taxes, including local property tax liens and those filed by the IRS for missed federal tax payments.   Thus, tax lien investing can be one way to acquire properties for less than they would normally be worth on the open market. Buying these properties in "tax deed sales" can be … Local, state, and federal governments may all obtain tax liens as a result of a property owner’s unpaid taxes. When this happens, the owner of the tax lien has the right to foreclose on the property and take ownership of the home. Other forms of tax debt can also lead to a tax lien on the property. You could have a federal tax lien on your house, but you could also have a state tax lien or a tax lien from your county or city. The collector doesn't want a lien, however. The lien is the amount owed and must be paid in order for the sale or refinancing of the property to go through. After a certain period of time, if the back taxes are not paid, the property can be seized and sold to pay the debt. When a property owner fall behind with his property taxes, the tax collector acquires an automatic lien against his home. Involuntary liens are placed on the property by others for unpaid obligations. For example, if you don’t pay your property taxes for a set number of years, the county will foreclose on your property. “Federal tax liens need to be satisfied via payment; however, there are circumstances in which the IRS will grant a partial release for the particular property, or there may be an opportunity to obtain a certificate of discharge which will release the property but not the lien itself,” advises Stitgen. A tax lien is a claim against property in order to secure the payment of taxes. But sometimes, the property owner does not ultimately pay the tax lien. The types of tax liens vary. 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