Tax lien interest rates, premiums and costs

A certificate's interest rate does not tell you how much money you will make. You also need to know what earns interest, what costs are refundable and how long your cash may be tied up.

How bidding changes the calculation

Pima County's instructions describe bidding on the interest rate an investor will accept. Use the awarded rate when evaluating a purchase, not the auction's advertised starting rate.

Jefferson County, Colorado allows premium bids above the certificate's face amount. The county says that premium is not refunded and earns no certificate interest.

A simple example

Suppose a certificate has $1,000 of interest-bearing principal and earns simple interest at 8% for exactly one year. You also pay a $100 premium and $20 in costs. Assume neither earns interest or is reimbursed.

You spend $1,120. The certificate earns $80, so repayment of principal and interest gives you $1,080. Your loss is $40 before taxes and any other costs.

This is a hypothetical cash-flow example, not a county payoff formula or an annualized yield calculation. A different redemption date would change the result.

Record every cost

Separate principal, premium, refundable deposits, fees and possible later payments. Label each amount as known, estimated or unresolved. Compare several holding periods, since prompt redemption is an assumption you cannot count on.

When using ParcelShopper, keep the amount labels. A tax balance, opening bid, current quote and asking price mean different things. Obtain missing amounts from the responsible authority before using them in a calculation.

Keep assumptions in property notes. CSV export, available on eligible plans, lets you organize a separate spreadsheet analysis while retaining the source labels.

Reviewed November 8, 2026. The example is illustrative, not individualized investment advice.