Last Updated on April 22, 2026
Buying a house at an auction for way less than it’s worth? It sounds too good to be true, but it actually happens, and it’s called a tax sale auction. Let’s break it all down in a simple way.
Table of contents
What Is a Tax Sale?
When a homeowner doesn’t pay their property taxes, the county (the local government) steps in. They need to get that money back somehow. So they sell something related to that property at an auction.
There are two types of tax sales:
1. Tax Lien: You Buy the Debt
In this type, the county sells you the unpaid tax bill. You’re not buying the house itself; you’re buying the debt. And in return, you earn interest on that money. Think of it like lending money and getting paid back with extra on top.
2. Tax Deed: You Buy the Property
In this type, the county actually auctions off the real house or property. The owner didn’t pay their taxes, so the county takes the home and sells it to someone else. You could end up owning a whole property this way!
Why Do High Taxes Lead to More Auctions?
Here’s a simple way to think about it:
- High Tax Rate: Some states charge more than 1.2% in property taxes every year
- Owners Fall Behind: When taxes are high, more people struggle to pay them
- County Files a Lien: The unpaid taxes become an official legal problem (a “lien”)
- County Auctions It: The county sells the lien or the actual property to get their money back
So the higher the taxes in a state, the more auctions there are. More auctions = more chances for you to find a deal!
The Top 10 States With the Highest Property Tax Rates
If you’re looking for the most tax sale opportunities, these are the states with the highest property tax rates:
| Rank | State | Tax Rate | Median Home Price |
| 1 | Illinois | 1.84% | $299,450 |
| 2 | New Jersey | 1.58% | $544,450 |
| 3 | Vermont | 1.40% | $495,000 |
| 4 | Connecticut | 1.36% | $507,500 |
| 5 | Ohio | 1.32% | $272,450 |
| 6 | New Hampshire | 1.29% | $587,450 |
| 7 | Iowa | 1.25% | $279,000 |
| 8 | Pennsylvania | 1.24% | $300,000 |
| 9 | Nebraska | 1.24% | $345,000 |
| 10 | New York | 1.23% | $672,000 |
Most of these states are in the northeastern and midwestern parts of the US.
The 3 Best States for Auction Opportunities Right Now
Not every high-tax state is a great place to invest. The best spots are ones with high tax rates and homes that are still affordable. That combo means more auctions and lower prices to buy in.
#1 Illinois (1.84% Tax Rate | $299k Median Price)
Illinois has the highest property tax rate in the whole country. And homes there are still fairly affordable compared to states like New Jersey or Connecticut. That’s a powerful mix, lots of auctions plus homes you can actually afford to buy.
#2 Ohio (1.32% Tax Rate | $272k Median Price)
Ohio is in the top 5 for tax rates, and it has the lowest median home price of the three. Cheaper homes mean you need less money to get started with tax sales, which is great if you’re just beginning to invest.
#3 Iowa (1.25% Tax Rate | $279k Median Price)
Iowa has a high tax rate and low home values. Less competition from other buyers and more affordable tax sale entry prices make it a solid choice.
Quick Summary
- Tax sales happen when homeowners don’t pay their property taxes
- You can buy the debt (tax lien) or the property (tax deed)
- Higher state tax rates = more people fall behind = more auctions
- Illinois, Ohio, and Iowa are currently the top 3 states with the most auction opportunities
- These states offer a sweet spot: high tax rates + affordable home prices
Bottom Line
Whether you’re a beginner or already know a thing or two about real estate, tax sale auctions can be a smart way to find deals. Just make sure you do your research before jumping in; every state has different rules, and it’s always good to know exactly what you’re buying!
-Dustin
