Tax Deed

Posted in Finance, Accounting and Economics Terms, Total Reads: 236
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Definition: Tax Deed

It is a legality clause that grants the ownership right of a property to the government organization when the owner defaults on his payment of taxes. It gives the government the right to sell the property and recover the tax due by that date. The property is generally auctioned off with the base price set at the amount of taxes due.


Two methods are employed to recover the delinquent tax. Tax deed is one of the methods while the other being tax lien sale.


In the tax deed the minimum bid is the amount of taxes to be paid along with some interest charges and the cost associated with auctioning the property. In the absence of any buyer the property is handed over to the government organization. Some jurisdiction allows the owners some time frame to redeem back the property. The time frame allotted is called as the “redemption period”.


The tax deed may also be used with tax lien sale process. In this process the lien holder who is generally a third party other than the government goes for the public sale of the property. HE sets the minimum bid for the sale based on the taxes due and other cost incurred in the sale of the property. In the absence of any buyer the lien holder will take the property as per the clause in the redemption period.

 

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