A tax sale is the sale of a property by municipal or government tax authorities in cases where the owner has failed to pay the outstanding property taxes.
The sale can be held by public auction, by public tender or by sealed bids.
Usually, the successful purchaser acquires nearly immediate clear title and immediate possession of the property. On occasion, the purchaser’s right to possession of the property is postponed in order to enable the delinquent taxpayer a specified period of time in which to repay the tax.
There are risks involved, but Professional Real Estate Investors who do their research are assured of returns on their investment, depending on the property. Very few legal investments can beat this guarantee. The proceeds of the sale are used to pay the unpaid taxes and other expenses that were incurred in listing the property. The balance, if any, is usually given to the delinquent taxpayer.
Occasionally, when taxes due on a property remain unpaid, the tax authority may sell, at public auction, a “lien” obtained against the delinquent taxpayer’s property.
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Canadian Tax Sale Properties
The successful bidder can subsequently convert this lien into ownership of the property if the sums due are not paid by the delinquent taxpayer within a specified redemption period. Professional Real Estate investors are aware of the risk and know that previous owner can redeem the property.
Each city, county, town, village, township and municipality in each province has their own way of dealing with tax defaulted property sales. Proper education can be key to the goldmine.
Simply put, tax sales are public auctions where properties are sold to the highest bidder. Throughout the year, cities, towns, villages, townships and municipalities, in each province, compile a list of properties against which taxes have been outstanding for at least two consecutive years. After this two year period, the municipal treasurer prepares a tax arrears certificate and registers it against the property in question.
This certificate gives an accurate description of the property and indicates that the land will be sold by public sale if all taxes are not paid to the municipality within one year of the registration of the certificate.
In spite of the municipality’s efforts to collect these taxes, they often go unpaid and the properties are put up for auction, allowing the public the opportunity to purchase these properties. This is how you get real bargains. Property can be bought for as low as 10cents or 20cents on the dollar. But these properties can only be purchased by informed educated Professional Real Estate investors.
WHAT TYPES OF PROPERTIES ARE SOLD IN TAX SALES IN CANADA?
Tax sale properties can be found in every province. They can include vacant lands (such as bush lots and timberland), improved lands (such as farms, cottages and houses), commercial or industrial properties, and occasionally islands. They vary from small lots to large parcels, with hundreds of acres.
HOW DO YOU BUY TAX SALE PROPERTIES IN CANADA?
First you have to know where and when the sales will take place, then you can proceed. There are two ways in which tax authorities sell properties: either by public auction or public tender, with sealed/closed bids.
WHY DON’T OWNERS PAY THE TAXES DUE IN CANADA?
There are many reasons why properties are sold for non-payment of taxes. Some of the most common ones are financial difficulties, death of an owner (with no apparent will or heir), owner living abroad and not realizing his/her obligations, owner moved and cannot be traced, disputes of ownership with no party resorting to the courts for settlement, etc…
Most tax deed sales are by competitive bid. Many Provinces only have one sale per year, Ontario has sales every month. Sheriffs may also conduct sales. In general, Canada tax sales have fewer properties than US tax sales because the Provinces can be fairly lenient on property owners. Each province handles sales differently. Tax sales are often conducted in the largest cities. You can learn more by taking Real estate Millionaire Strategies Apprenticeship (REMSA)
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The above information is provided as a guideline and is not intended to give a professional legal advice. Please consult a real estate lawyer for their opinion on your particular case.
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