Live Tax Deed Sale Questions & Answers

Last Updated on September 1, 2025

In our recent weekend Q&A session, we received several thoughtful questions about tax lien and tax deed investing. We summarised the most important points below so you can revisit them at your own pace. Please remember that laws differ by state and you should verify details with your local tax collector or a qualified professional.

Are profits and interest from tax liens or deeds taxable?

Yes. Any profit from a real estate investment is generally treated as a capital gain and must be reported to the tax authorities. The U.S. Internal Revenue Service classifies gains as either short‑term (assets held for one year or less) or long‑term (held for more than one year). Long‑term gains often benefit from lower tax rates. If you sell investment property, part of the profit (called “unrecaptured section 1250 gain”) can be taxed at up to 25 % Many investors work with accountants to maximize deductions, use 1031 exchanges or hold property in retirement accounts to defer or reduce taxes.

How long must I hold a tax lien before I’m repaid?

The repayment period depends on the state. In many states, the property owner has at least one year after a tax sale to redeem the property. Some states have shorter windows for non‑homestead properties, while others can extend up to three years. Florida, for example, allows a two‑year redemption window before a certificate holder can apply for a tax deed. Investors typically earn interest during this period. According to Investopedia, interest rates on tax liens vary widely – from about 4 % to 36 % per year, and repayment schedules usually last between six months and three years. Always check the redemption period and interest rules for your state or county.

Budgeting for foreclosure costs

If the owner doesn’t redeem, the lien holder may foreclose to obtain the property. We recommend setting aside USD 1,000–3,000 for legal and filing costs. Actual expenses depend on local rules and property value.

Can I sell a property before the redemption period ends?

In a redemption state, you can’t obtain a clear title until the redemption period expires. That means you can’t legally transfer ownership with a warranty deed. However, some investors negotiate with the delinquent owner to sign paperwork waiving their right of redemption. This is complex and requires proper legal documents. We suggest consulting an attorney to ensure all laws are followed and to avoid future disputes.

How do I redeem a tax lien certificate in Prince George’s County, Maryland?

Maryland law allows the property owner (or another interested party) to redeem the property at any time until their right of redemption is foreclosed. To redeem a property sold at tax sale, the owner must pay the county the amount bid at the sale plus interest and penalties If redemption happens more than four months after the sale, the owner must also reimburse the certificate holder’s expenses and attorney’s fees The purchaser cannot file a foreclosure action until six months after the sale (nine months in Baltimore City), and they must file within two years or the certificate becomes void Always check the county’s website or call the tax office for current procedures. You can also read this  tax sale FAQ of Maryland for detailed steps.

Which county is best for a New Yorker investing in tax sales in Pennsylvania?

We’ve had good experiences in Philadelphia County. Philadelphia holds regular tax sales and provides detailed information on its website. When selecting a county, look at factors like available inventory, competition, minimum bid rules and local redemption periods. You may also want to review our guide on property selection strategies for more tips.

What kind of returns can you expect?

Returns vary by state, bidding format and property. In interest‑rate states, certificates earn simple interest capped by statute; Florida certificates accrue up to 18 % per year, though auction bidding often drives the rate down. Penalty states require the owner to pay a flat penalty upon redemption – Texas and Georgia are well‑known examples. According to Investopedia, investors may earn between 4 % and 36 %. In our recent deals:

• We’ve acquired tax‑foreclosed properties in Philadelphia for USD 5–10 k and sold or rented them for much more after repairs.
  
• A student purchased a car wash, convenience store and gas station at a deed sale for about USD 5 k total (including foreclosure costs), creating hundreds of thousands of dollars in equity.
  
• Our hedge fund has invested around USD 1.3 million in live auctions, with properties valued at about USD 3 million after repairs.
  

These examples illustrate what’s possible but shouldn’t be taken as typical. Always perform due diligence.

What should I bring to a live auction training?

If you join us at a live auction event, we’ll provide local contacts, including title search firms, attorneys and contractors. You can either partner with our hedge fund or work independently and leverage our network. We occasionally invite guest speakers, such as lawyers and contractors, to share their insights. Feel free to email us at [email protected] for details.

Persistence and the learning curve

Tax lien and deed investing has a learning curve. In the video, we compared it to wake surfing: you may fall several times before you get the hang of it. Many beginners feel overwhelmed when researching counties, obtaining lists or understanding statutes. Stick with it. As you gain experience, tasks like due diligence, bidding strategies and property valuation become second nature. Patience pays off.

Frequently asked questions

Take the next step

If you’re ready to buy your first tax deed property at a steep discount, check out our free mini‑course or schedule a free call with us. We’ll walk you through your first deal and help you avoid costly mistakes.