As with any other country, a government can only run if it is able to collect taxes from its citizens. One of the types of taxes collected by the government is property tax. If the homeowner is unable to pay this, his property is deemed foreclosed and is turned over to the state.

Government tax foreclosures have become an opportunity for other U.S. citizens to purchase their own home. Others have become investors in government tax foreclosure properties by purchasing either tax liens or deeds. Either way, government tax foreclosure sales are now very popular across the nation, as each area has their own auctions and bidding for these properties.

How is tax lien different from tax deed? The Internal Revenue Services or IRS issues a tax lien on homeowners who are unable to pay the property tax. The owners are allowed a grace period of ten days to pay upon receipt of the notice. If the owner does not respond, a Public Notice of Government Lien is published and the house will be classified as government tax foreclosure properties. The property now becomes available to any buyer through public bidding.

Potential owners and investors can now purchase the deed or rights of the property. The minimum bid is the amount of tax plus administration charges and other expenses, as well as any interest accumulated by the property. Usually, the auction of a government tax foreclosure properties are quite beneficial to potential owners, as they can get the property at a fraction of its original cost and value.

Once the deed is purchased, the successful bidder is given the deed of the property, with specific restrictions and time period. If the original owner is able to redeem the property by paying off the total amount the successful bidder has accumulated, then the foreclosed property is returned. But, if the original owner is unable to do this within the set period of time, then the absolute deed of ownership is awarded to the new owner.

Bidders can also opt to invest in tax lien certificates, wherein the foreclosed property is still the responsibility of the original owner, but the investor will be the one to pay the tax on the property. The investor can then set interest rates on the tax amount he paid and If the owner is unable to pay the bidder within the agreed upon time frame, the bidder is awarded the ownership of the property.