If you do not pay your Commonwealth taxes, the collector will file a Notice of Massachusetts Tax Lien against all of your real and personal property. This may prevent the sale or transfer of the property and it might potentially harm your credit score.
How do tax liens work in Massachusetts?
Cities and towns in Massachusetts have the power to register a lien against a property owner at the Registry of Deeds to recover delinquent taxes. Municipalities can subsequently revoke property owners’ redemption rights (to get clear title to the property returned to them by paying the taxes).
If you don’t pay your property taxes on time in Massachusetts, you risk losing your house. Property owners are obligated to pay property taxes. If you have a mortgage on your home, the loan servicer may deduct money from your monthly mortgage payment to pay your property taxes later.
Why does my credit report show a tax lien?
The IRS will issue a Notice of Federal tax lien if you do not pay the entire amount of the bill (debt) on time. When you don’t pay your tax bill, a tax lien secures the government’s claim on your property. On the other hand, a levy occurs when the property is taken to settle a tax debt.
Is there a term of redemption in Massachusetts?
After a non-judicial foreclosure in Massachusetts, you don’t have a right to redeem. You do, however, have what’s known as an “equitable right of redemption” before the transaction. As a result, you can save the house before selling it by paying down the entire debt.
Is it possible to sell my home with a tax lien?
A tax lien is a debt claim on your assets, the most valuable of which is your home. It implies you won’t be able to sell your home and profit from the sale until the tax lien debt is paid off.
What is the procedure for releasing a lien?
To secure a lien release, a taxpayer must pay the amount stated on the lien, plus any extra interest and penalties accrued up to the payment date. Payment can be done by one of the following methods:
- Check from the bank
- Money order (personal)
- Check that it is certified
- Check from the Attorney’s Client Fund
- Pay via credit card
Risks of tax lien investment
Tax lien investing is a good business, although you need to consider the risks involved like:
- It is a high-yielding investment, but that isn’t always the case.
- Unpaid taxes have an expiry date.
- Suppose the property owner stops paying the property taxes by the end of the redemption window. In that case, the lienholder does have the right to initiate foreclosure procedures and take ownership of the property.
Individual investors thinking about investing in tax liens should, above all, conduct their research to avoid owning worthless properties.