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The only sure fire way to tell if a website has been penalized is to actually check the Google webmaster console.
But here are the main things I consider when it comes to registering an expired domain.
1. Archive.org history. Was the website hacked in the past? was it used as a PBN before? any 301 redirects?
2. Backlink history. Are the backlinks relevant to your niche? are the backlinks in your desired language? Do the backlinks provide any value or are they all forum links? etc.
3. Traffic History. Ahrefs has a history of traffic a site has received. So if you see a steep drop off in traffic and no traffic recovery on an expired domain - it's best you steer clear of that domain.
I have a 12 step checklist if you'd like me to post it - but primarily, these are the things I look at when I determine whether or not an expired domain will be useful for me.
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