What is a Tax Certificate?
A tax certificate represents a lien on real property and bears interest at a maximum rate of 18 percent per year. The cost to purchase a certificate is listed beside each parcel in the delinquent advertisement and includes gross tax, interest, advertising cost and the cost of the Tax Certificate Sale.
A tax certificate does not convey ownership of a property. Rather, it entitles a purchaser to full payment by a delinquent taxpayer of the full certificate amount paid at the time of auction plus interest. The percentage interest begins at 18 percent. If taxes remain delinquent for two years, a purchaser may begin the tax deed application process to gain ownership of the property. For more information about this process, please contact the County directly. You may also refer to Chapter 197 of Title XIV of the Florida Statutes (www.taxsale.com/197).
What is a Tax Certificate Sale?
On the advertised day and time, the Tax Collector auctions and sells a tax certificate on each delinquent parcel at public auction. Each item is auctioned in advertising number order and the certificate is sold to the person bidding the lowest interest rate. Bidding begins at 18 percent.
What is an Internet tax sale?
An Internet tax sale is an online public auction of tax deeds or tax certificates used to collect delinquent real property taxes due to a County or other taxing authority. Bids are placed using a computer and a Web browser.
How does the overall bidding process work?
Internet tax certificate auctions in the State of Florida are conducted via a sealed bid format. Bidders are encouraged to submit the lowest percentage rate bid in order to win a particular tax certificate. This minimum bid is held in confidence in the system until the end of bidding. The system will honor the percentage rate necessary to maintain the bidder’s winning position, which may not be the lowest bid submitted.
By placing a bid at any time prior to the Bid End date, you are only reserving the bid amount entered. Bids are not officially submitted until the scheduled Bid End date and time for each Bid Group. Bids may be increased, decreased or removed at any time prior to the scheduled Bid End date.
Bids will be accepted in increments of a quarter percent and can be no higher than 18 percent and no lower than 0 percent (bids placed at 0 percent will accrue no interest).
If only one bid is received on a particular auction item, the winning bid will be the highest percentage allowed (18 percent).
In Proxy bid situations, if there is more than one bid received, the winning bid will be equal to the second lowest minimum rate minus a quarter percent
Example: If there are two bidders and one bidder places a Proxy bid of 8 percent and the second bidder places a Proxy bid of 5 percent the second bidder will win and the winning bid will be 7.75 percent.
In the case of a tie where two or more bidders enter an identical low bid, a certified random selection process will be used to determine the winner.
How does an Internet tax sale differ from a local tax sale?
In a local tax sale, bidders gather in a designated area and literally voice their bids to a live auctioneer. In an Internet tax sale, bidders never meet face-to-face. Bids are placed online on a County auction Web site via a computer.
What if there are no bidders?
If there are no bidders for an advertised item, the item is issued to the County (Struck to County) at an interest rate of 18 percent. These may be purchased directly from the County at 18 percent after the sale.
What are the benefits for the bidders of an Internet tax sale?
• Quick and effortless access to information on delinquent properties offered for auction and to County-provided data or links.
• The ability to place bids from the comfort of their homes or offices.
• The efficiency of electronic communications, ensuring the accurate communication of bids and awards.
• An extended period of time in which to research properties and submit bids.
• The ability to view auction results almost immediately after the close of an auction.
• Assistance from Bid4Assets’ Customer Service.
When do real estate taxes become delinquent?
Real estate taxes become delinquent April 1 each year. Example: 2005 taxes become delinquent April 1, 2006. At that time, 3 percent interest is added to the gross amount.
Are delinquent taxes advertised?
Yes, a list of all real property with delinquent taxes is advertised once a week for three consecutive weeks in a local newspaper as well as on the County’s Web site. The advertisement specifies the place, date, and the time of the Tax Certificate Sale.
How are tax certificates “redeemed”?
In order to clear the property of the tax certificate lien, the property owner must pay the amount of the tax certificate plus the rate of interest at which the certificate was sold, calculated from the month of the sale to the month of redemption. When a tax certificate is redeemed, a $6.25 redemption fee is also charged and collected by the Tax Collector’s office. Taxpayers redeem certificates through the Tax Collector’s office. After payment, the certificate holder receives the amount invested plus interest. Please note that interest earned is taxable and must be reported to the IRS. Each January, a Federal Form 1099-INT is sent to each certificate holder for earnings in the previous year.
What if the tax certificate is not redeemed?
If the certificate is not redeemed within two years from the date the tax became delinquent, the certificate holder may begin the tax deed application process. For more information about this process, please contact the County directly. You may also refer to Chapter 197, of Title XIV, of the Florida Statutes (www.taxsale.com/197).
Is this a risk-free investment?
No. Although a secure investment in most cases, as with any investment, there is an element of risk. Some possible risks to consider are:
• If there is a correction to the original taxes levied that would decrease the certificate value or cancel the certificate, the law provides for the portion in error to be refunded to the certificate holder with 8 percent interest or rate of interest bid, whichever is less, per annum, calculated monthly to the date of cancellation or correction.
• If the property value drops significantly in subsequent tax years, it may cost more to bring the property to sale than the value gained by owning the property.
• If the landowner enters into bankruptcy, the certificate holder is prevented from enforcing the lien until the bankruptcy is released.
(Please Note: The County Conditions document supersedes any information provided in the Online Tax Sales 101 section.)
How much does it cost to participate?
County tax sales are public auctions mandated by state statute and there are no fees to participate. Counties may require bidders to place bid deposits as a precondition to bidding.