Tax Lien Tax Question

i dont know much about tax liens YET, however i'm really curious, what with april 15th approaching and what not.

how do you consider the tax consequences for a tax lien?
is it capital gains(short or long) or is it subject to SE tax.

and should this post be in the tax forum?

Comments(1)

  • RonaldStarr10th April, 2004

    nirav--(MD)-------------------

    I think this is an appropriate forum as you are asking about tax liens and a topic related to them.

    When you get a redemption on a tax lien, it is interest earned, thus taxed at your ordinary income tax rate. The entity that handled the tax sale and the lien--often the county treasurer or tax collection--will issue you a 1099Misc income form after the end of the calendar year in which your lien was redeemed.

    Since you report it as interest income, there is no self-employment social security tax owed.

    Good Investing******Ron Starr*************

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