Louisiana Becomes a Tax Lien State in 2026

Changes to the Tax Sale Laws

If you're a tax investor in Louisiana, you’ll want to pay attention to the recent constitutional amendment introduced by Act 409 and an overhaul of the revised statutes on tax sales. Approved by voters in December 2024, the new law will officially make Louisiana a tax lien state. Here's a breakdown of what you need to know and how these changes will impact tax sales starting in 2026.

The Existing System: Tax Sale Certificates

In the tax investing world, states are considered lien states or deed states, but a handful of states, Louisiana among them, use a mixed approach: A tax deed is sold at auction, but is subject to a redemptive period, similar to a tax lien. This tax lien-deed hybrid is known as a tax sale certificate in Louisiana. A tax sale certificate has a fixed interest rate of 12% per year, or 1% per month. However, unlike other states with a fixed interest rate, Louisiana does not have a premium bid auction. Instead, the state uses a non-standard system by bidding down the percentage of ownership interest that an investor can acquire in the property, in the case where no redemption occurs. This can lead to co-owning property with the tax debtor, a unique situation that's led to some investors and attorneys coming up with clever solutions, albeit expensive and time-consuming ones.

The New System: Tax Liens

Beginning in 2026, winning bidders of tax sales in Louisiana will be issued a tax lien. In addition to making the shift from a deed to a lien, a new auction process is outlined in the changes to Louisiana Revised Statute § 47:2154. At auction, investors will bid down the interest rate of the lien, as is common in many other lien states. The rules for auctions are:

  • Bidding starts at 1% interest per month, non-compounding.
  • Bids can be in increments of one-tenth of one percent (0.1%).
  • The minimum bid is seven-tenths of one percent (0.7%) interest per month.

The lowest interest rate wins the auction, with the first-to-bid being the tie-breaker.

Despite the effort to move to a more standardized way of conducting tax sales, the bidding rules are still a bit limited when it comes to creating a competitive auction. The new bidding procedure means there are effectively four unique bidding positions, resulting in tax liens with interest rates at:

  • 12% interest per year for a bid of 1%
  • 10.8% interest per year for a bid of 0.9%
  • 9.6% interest per year for a bid of 0.8%
  • 8.4% interest per year for a bid of 0.7%

What This Means for Louisiana Tax Sales

For investors, Louisiana’s move to a tax lien state should streamline a confusing system, bringing the state in line with many others across the county. Removing the bid down of ownership percentage at auction isa massive change for the better. Even if the new bidding procedure is somewhat limited, it does guarantee a minimum of 8.4% interest per year, favoring investor returns over states that allow bidding down to 0%.

Stay tuned for more updates on Louisiana’s overhaul to the tax sale code.

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