Revealing the Enigma of Connecticut Tax Sales Auctions: A Township Treasure Hunt

Sales Type: Redeemable Deeds
Frequency: Varies
Interest Rate: 18%
Penalty: None
Redemption Period: 6mo or 60 Days (if abandoned)
Bid Method: Premium Bid

When it comes to tax lien or tax deed investments, the landscape can vary significantly from state to state. Today, let’s delve into the unique realm of Connecticut tax auctions and explore whether there’s an upside to seeking investment opportunities in this smaller-population state.

Connecticut’s Distinct Approach:
Unlike states with a multitude of counties, Connecticut boasts only eight counties. However, what sets the state apart is its 169 townships, each playing a role in selling tax-defaulted properties at CT tax auctions. While counties usually spearhead such auctions, in Connecticut, it’s the numerous townships that actively participate, offering redeemable deeds to potential investors.

Understanding Redeemable Deeds:
So, what exactly is a redeemable deed? When a property owner fails to pay their property taxes, the treasurer has the authority to sell the property deed at an auction to an investor. The investor, in turn, receives what is known as a redeemable deed. But what makes this type of deed unique?

In Connecticut, the investor holding the deed may need to return it within six months. During this period, the property owner has the opportunity to reclaim their property by reimbursing the investor’s initial purchase amount, plus an additional 18%. This distinctive arrangement characterizes a redeemable deed in the Connecticut tax auction landscape.

Interest Rates on Redeemable Deeds:
One key question that arises is the interest rate investors can expect on redeemable deeds at Connecticut tax lien sales. The established rate is 18%, but it’s important to note that this is an annualized rate. Given the requirement for property owners to redeem within six months, the effective interest rate for investors is halved to 9%.

Is it Worth the Investment?
The question looms – is a 9% return sufficient incentive for investors to engage in Connecticut tax auctions? With the redemption period and the potential for property owners to reclaim their assets, some may find the modest return less appealing compared to alternative investment opportunities.

Connecticut’s tax auction system, characterized by the prevalence of townships selling redeemable deeds, offers a unique approach to tax lien and tax deed investments. As investors weigh the pros and cons, the annualized 9% return on redeemable deeds adds an additional layer of complexity to the decision-making process. While the state’s approach may differ from the norm, the considerations surrounding Connecticut tax auctions underscore the importance of thorough research and a nuanced understanding of the local dynamics before diving into the world of tax-defaulted property investments.

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