Days after Volusia County’s annual sale of tax certificates ended, some unsold certificates are still available for purchase.
The full results of the tax-certificate sale are not yet available, as some buyers have not yet paid for their tax certificates. So far, the statistics show the county received more than $21 million in delinquent taxes and fees.
A tax certificate is a document declaring the property taxes, along with any special assessments, have not been paid, and thus the county takes action to recover the delinquent taxes, plus the costs of such an official action.
Before the sale began in May, the Tax Collector’s Office advertised tax certificates would be available for sale for 15,139 properties around the county. The tax certificates were offered to the public for sale starting May 1, and the sale closed May 31.
As the sale got underway and progressed, 2,698 properties were removed from the tax-certificate market, as their owners made a late payment of the overdue tax bills. Taxes for the 2022-23 fiscal year became payable in November 2022, and the deadline for payment was March 31, 2023.
The sale, which nowadays takes place only online, takes the form of an auction in which a prospective buyer bids on the interest rate he/she is willing to accept from the owner of the property to redeem it from a rising debt and possible future forced sale to recover the debt.
When the sale opens, the interest rate begins at a high of 18 percent, and investors may bid downward to the lowest rate they are willing to accept. The person willing to accept the lowest interest rate submitted on a parcel of property thus may purchase the tax certificate by paying all unpaid ad valorem taxes and assessments, plus the costs of advertising and other fees, penalties and interest resulting from the property owner’s nonpayment.
When Volusia County’s tax-certificate sale ended May 31, 2,381 certificates remained unsold. These certificates were “struck” to the county, meaning the county became the purchaser of last resort. The interest rate on the unsold tax certificates was set at 18 percent.
Asked if the Tax Collector’s Office will conduct a second auction of tax certificates bought by the county, Holly Smith said such a sale may take place in the coming months.
“All certificates still available will be sold first come first serve once the sale is balanced,” Smith wrote in an email reply to a query from The Beacon. “Note: For hurricane affected properties, we will have a second sale later this year, if needed. These are properties that were affected by the storms and had modified tax deadlines, per the State. Properties that don’t pay the taxes will have certificates in the sale.”
The buyers of tax certificates must complete a U.S. Internal Revenue Service Form W-9. The W-9 is a request for a taxpayer-identification number, which is necessary for individuals with certain types of income, including the interest paid to a tax-certificate holder. The interest on the repayment of the back taxes related to a tax certificate is subject to federal income taxes.
The tax certificate becomes a lien on the property that must be paid before the property may be sold. The property owner must pay the person holding the tax certificate all of the unpaid debt plus the interest accruing on that debt. If the property owner does not pay the tax debt within two years from the time the certificate is sold, the holder of the tax certificate may apply for a tax deed or force the sale of the property to satisfy the tax debt.
A tax certificate has a maximum life of seven years, meaning the holder must act to recover the debt during that period. If the seven-year period expires without the owner’s redemption of the tax certificate, the certificate holder loses the right to reclaim his/her investment.
Anyone wishing to purchase tax certificates not auctioned off last month may contact the Tax Collector’s Office for more information or visit lienhub.com/volusia.