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Internet eases bidding for tax certificates

When Citrus residents don't pay property taxes, others might be able to turn a profit from buying interest-bearing tax certificates.

By JORGE SANCHEZ
Published December 5, 2005

INVERNESS - Property tax bills were sent out in November, and for those who don't pay up, their delinquent property taxes could be someone else's investment opportunity in a few months.

Buying tax certificates, which are interest-bearing liens on unpaid property taxes, is a way to invest money and receive returns that are slightly higher than most certificates of deposit.

And if you're willing to wait a couple of years, there is a chance to buy land at an auction where it may be sold below market value.

Last year, 5,235 tax certificates were auctioned, according to the Citrus County Tax Collector's Office. The county received $2.76-million as a result.

Buying a tax certificate does not mean that a person owns the property. Instead, the person buys a lien for the amount of the unpaid tax, plus interest. The certificate holder cashes in whenever the lien is paid off. This can be done either by redemption (the property owner pays the delinquent tax) or when the property is sold or auctioned off at the courthouse. The courthouse auction comes after a two-year waiting period.

The tax certificates are purchased through an online auction.

The 2006 tax certificate sale marks the second time the Internet will be used for the auction. Visit the Web site at www.bidcitrus.com to learn more about the online bidding process and to register as a bidder.

"Some companies used to send people all over the state to attend tax auctions," said Barbara Good, assistant tax collector. "But with the online auction, that doesn't happen anymore, and actually, even more people can bid."

The winner of a tax certificate auction pays the delinquent taxes and agrees to accept the lowest interest rate on the lien until redemption is made. Although bidding can open as high as 18 percent, the real return is lower, as the bidding drives down the interest rates.

Last year's average rate of return in a tax certificate was 4.75 percent, according to the Tax Collector's Office.

Property taxes are payable through March 31. By mid April, parcels with unpaid property taxes are advertised in local newspapers. In Citrus County, these appear in the Citrus County Chronicle . After a series of publications, the properties with the unpaid taxes are listed on the Web site. The tax certificate sale is held in late May.

If a tax certificate is not redeemed in two years, the property can be sold to pay off the taxes. This process is called a tax deed auction. The process is a conventional auction, with the property sold to the highest bidder. The tax certificate holder is the opening bid.

Tax deed auctions are conducted by the Clerk of the Circuit Court and are held at 9:30 a.m. on Wednesdays in the hallway of the first floor of the courthouse. Check the clerk's Web site at www.clerk.citrus.fl.us for information on the properties.

--Jorge Sanchez can be reached at 860-7313 or by e-mail at sanchez@sptimes.com

[Last modified December 5, 2005, 03:00:29]