HOW THE PROCESS WORKS
1) Assume home owner fails to pay their taxes of $5,000 on a property worth $100,000
2) The county offers those taxes for sale at auction and sells the taxes for $50,000
IMPORTANT NOTE: In the state of Georgia, the penalty is set at 20% and the winning bidder is he who is willing to pay the highest amount for the tax deed. The amount above the original offer price is considered a “premium”. The property owner is responsible for paying the penalty of 20% on the total purchase price – not just on the original price offered at sale. This is further explained in Georgia Statute: OCGA 48-4-42
3) By state law, the winning bidder receives a tax deed to the property
The home owner has one year (from date of purchase) to redeem the taxes.
4) The total cost to redeem is the total paid by the tax buyer, plus 20% in penalties.
State Statute (OCGA 48-4-42): The owner, creditor (like a mortgage company), or any other person with interest in the property, must pay the tax deed purchaser, the tax amount of the property paid at tax sale, plus any taxes paid on the property by the purchaser after the sale, plus any special assessment on the property, plus a 20% premium for the first year or fraction of a year, and a 10% premium of the amount for each additional year or fraction of a years, which has elapsed since the date of sale.