From auction to closing, we will teach you how to pick up low-priced properties, with the latest tax rates and tax avoidance tips

In 2025, the number of foreclosure houses in the United States will increase by 15%, and the average discount will reach 🚀30% of the market price! Florida and California account for more than 25% and have become “gold rush mecca”. The low price advantage (20%-40% below the market price) attracts budget constraints and investors, foreclosure is a great opportunity to buy a home and grow your wealth!

I. Application Process for Foreclosed Properties

1. Types of Foreclosed Properties

Foreclosed properties are mainly divided into two types:

• Judicial Foreclosure: Requires court proceedings, usually taking longer.
• Non-Judicial Foreclosure: Does not require court involvement, making the process simpler and faster.

2. Steps to Apply for Foreclosed Properties

Step 1: Finding Foreclosed Properties

• Online Platforms: Websites like RealtyTrac, Zillow, and Foreclosure.com provide listings of foreclosed properties.
• Local Newspapers: Some foreclosed property information is published in local newspapers.
• Court Notices: Judicial foreclosure listings are often posted on local court bulletin boards.

Step 2: Researching Property Information

• Property Valuation: Understand the market value, surrounding environment, school districts, and other details of the property.
• Title Search: Ensure the property is free of other debts or legal disputes.
• Home Inspection: If possible, conduct a home inspection to assess the property’s actual condition.

Step 3: Participating in the Auction

• Auction Registration: Register to participate in the auction at the specified time and location.
• Deposit Payment: Typically, a deposit (e.g., 5%-10% of the property price) is required.
• Auction Process: The auction process is often intense, so set a budget and remain calm.

Step 4: Completing the Transaction

• Final Payment: After a successful bid, the remaining payment must be made within the stipulated time.
• Transfer of Ownership: Complete the property transfer process to obtain ownership.

3. Data on the Foreclosed Property Application Process

Step	Time	Cost
Finding Foreclosed Properties	1-2 weeks	0−0−500
Researching Property Information	2-4 weeks	500−500−1,000
Participating in the Auction	1 day	Deposit: 5%-10%
Completing the Transaction	2-4 weeks	Final Payment: 90%-95%

II. Tax Issues Related to Foreclosed Properties

1. Property Tax

• Property Tax Calculation: Property tax is typically calculated as a percentage of the property’s assessed value, with rates varying by state.
• Delinquent Property Taxes: Foreclosed properties may have unpaid property taxes, so it is essential to understand and calculate the amount owed before purchasing.

2. Capital Gains Tax

• Capital Gains Tax Calculation: If the property appreciates in value upon sale, capital gains tax is applicable. Rates vary based on the holding period: short-term (ordinary income tax rates) and long-term (0%-20%).
• 1031 Exchange: Through the 1031 exchange provision, proceeds from the sale of a foreclosed property can be used to purchase another property, deferring capital gains tax.

3. Other Tax Issues

• Income Tax: If the foreclosed property is rented out, rental income is subject to income tax.
• Estate Tax: If the foreclosed property is inherited, estate tax may apply.

4. Tax Data for Foreclosed Properties

Tax Type	Rate	Remarks
Property Tax	1%-3%	Based on the property’s assessed value; rates vary by state.
Capital Gains Tax	0%-20%	Based on holding period: short-term (less than 1 year) taxed at ordinary income rates; long-term (1 year or more) taxed at 0%-20%.
Income Tax	10%-37%	Based on income level: 0−0−11,000 (10%), 11,001−11,001−44,725 (12%), 44,726−44,726−95,375 (22%), 95,376−95,376−182,100 (24%), 182,101−182,101−231,250 (32%), 231,251−231,251−578,125 (35%), $578,126 and above (37%).
Estate Tax	18%-40%	Based on estate value: 0−0−10,000 (18%), 10,001−10,001−20,000 (20%), 20,001−20,001−40,000 (22%), 40,001−40,001−60,000 (24%), 60,001−60,001−80,000 (26%), 80,001−80,001−100,000 (28%), 100,001−100,001−150,000 (30%), 150,001−150,001−250,000 (32%), 250,001−250,001−500,000 (34%), 500,001−500,001−750,000 (37%), 750,001−750,001−1,000,000 (39%), $1,000,001 and above (40%).