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Simple Tax Lien Example

Let us assume you purchased a tax lien certificate at 18 percent at the last Will County, Illinois tax sale.  For ease of calculations we will assume the certificate is in the amount of $1,000 and was purchased on 11/15/2007.  So far we have:

Penalty Rate:  18%
Certificate Face:  $1,000
Purchase Date:  11/15/2007

This is enough information to calculate the amount you will make over different periods of time.  In Illinois the penalty rate is awarded to you every 6 months until the period of redemption expires.  The day after the tax sale you will be entitled to 18% of the face amount and 6 months after that another 18% and so on for each 6 months that passes before the period of redemption expires.  In dollars that would be $180 after 1 day, $360 after 6 months, $540 after 1 year, $720 after 1 year 6 months, $900 after 2 years, and $1080 after 2 years and 6 months. 

I know what most of you are thinking… Wow that’s a lot of money!!!  If it were only that simple everyone would be buying tax liens.  The truth is that the average rate of most tax liens in Illinois is closer to 4% than 18% as many books, seminars, and websites would have you believe.  So lets do the math on 4%.  That would be $40 after 1 day, $80 after 6 months, $120 after 1 year, $160 after 1 year 6 months, $200 after 2 years, and $240 after 2 years and 6 months.  These numbers aren’t quite as impressive and even worse yet some larger counties in Illinois go at rates of 1 or 2 percent.

This should give you a basic idea of how the return on tax liens works in Illinois.  This is a very over simplified example of how tax liens work and there are normally other fees and charges that apply.



Recent Tax Lien Articles


I’m a serious tax buyer…

If you’ve ever sent a letter that starts like this i can guarantee you are one of the many who have become prey for the hundreds of people out there promising to make you rich buying tax liens.  Most books or seminars only give broad definitions of how tax liens work and then supply a form letter so that you may send it to the county treasurer to obtain the exact details of how the tax sale procedures work in that county.  Save your money!!!  If you are really interested in purchasing tax liens read the Illinois Property Tax Code and hire a qualified real estate attorney to explain it to you.  For those of you who purchased the book and haven’t gotten around to mailing the letters I’ll save you the trouble and give you the answers now.

Illinois Internet Tax Sales - Do they exist???

There are currently no Internet Tax Sales conducted in Illinois although many counties do employ an automated bidding system.  Illinois law states that you must be present at the tax sale to bid.  While many new tax buyers may feel that Internet bidding is the way to go there are many major issues and concerns county collectors across the state will have to consider before opening up Illinois Tax Liens to the world wide web.

Why Buy Illinois Tax Certificates at 0%

In numerous counties around Illinois professional tax buyers have been purchasing thousands of tax lien certificates at 0%.  This has completely baffled all of the new tax buyers and others in the industry.  Before you start buying at 0% you need to know the possible strategies the pros are putting in place.