Illinois Tax Lien Question
I'll admit to being new at this, but I like to think that I have read just enough to be dangerous, so here is my first question:
You see all of these web sites and posts about Illinois being this great tax lien state (mostly regarding the rates of returns). Illinois is, for those of you who don't know, a bid down state meaning that the tax lien is sold to the person bidding the _lowest_ interest rate percentage (maximum rate is 18%). Information from the counties show that the average successful bid was between 1 and 3%.
Now to my questions: If I am only seeing 1-3% (per 6 month period), I am assuming that the other 15-17% is going to the county, yes? Does that interest rate apply _only_ to the lien that I purchase or to the entire amount of tax paid on that property (it is my understanding that any future unpaid taxes would be my responsibility as well, or am I wrong here)? So, for example, if I purchase a tax lien for $100 at 3%, but then have to pay a $1000 property tax bill the next year, do I only realize a 3% return, per six months, on $1100, or do I realize a 3% return on the $100 (plus fees) and 18% on the other $1000.
I've looked at various web sites, "handbooks", and even the state statutes, but I cannot find anything that answers this question. Anyone with experience in Illinois care to?
Thanks in advance,
Tom
On the subs that you pay you will get 12%, so after the sale, it is in your best interest to pay the next tax bill on the day it is due.
Thanks for the reply. I was thinking that there had to be some consideration given to subsequent payments, otherwise there really wouldn't be that much of a point in tying up funds in these type of investments.
Tom