The economic downturn and spiraling health care costs have contributed to an increase in home foreclosures in recent years. Foreclosures occur not only when a homeowner fails to pay their mortgage, but a tax foreclosure can result as well when the homeowner fails to pay personal and/or property taxes on their home. When a homeowner defaults on their taxes the government can record a tax lien and get a court order to foreclose on the home. Then the Internal Revenue Service or other government entity can sell the property at an auction to pay for the outstanding taxes.

Tax foreclosure properties can be a very good investment for real estate investors and home buyers. These properties are often sold for as little as 30-60% of what they would sell for on the open market. The IRS runs tax foreclosure auctions. You can find a listing of auctions at their website: http://www.treas.gov/auctions/irs/cat_Real7.htm. The website also provides details on how you can participate in an IRS auction. You can also get information on properties by visiting the local County Clerk’s office.

If you would like to participate in a tax foreclosure auction be sure that you familiarize yourself with tax foreclosure laws. The laws vary from state to state and from county to county. The more you familiarize yourself with how the laws and auctions work, the more likely you will be to win a bid for the property you are interested in.

If possible you should visit the actual property you are interested in bidding on before the auction takes place. If you are able to view the interior that would be ideal, and you may also want to hire a property inspector to assess the value and condition of the property for you.

If you win the tax foreclosure property at auction you will need to pay in full, either in cash or by cashier check the day of the auction, so you will need to have your financing in order before the auction. Also realize that the home buyer has up until the day of the auction to pay taxes owed, so you may end up not having the ability to bid on the property you are interested in.

Tax foreclosure properties are potentially a great investment for the real estate investor and home buyer, Just be sure to familiarize yourself with the laws governing foreclosures and the auction process, as well as thoroughly familarizing yourself with any tax foreclosure property you may be interested in.