Can I Sell My House with a Tax Lien?

Every year a great deal of local property taxes are left unpaid. To recoup their money, the federal government uses tools such as tax liens. Though having a tax lien on your property can hinder your sale, it can’t stop it altogether. If you currently have this problem and are looking for information on selling your home, keep reading.

What is a Tax Lien?

When you are delinquent or fail to pay the taxes you owe to the IRS, the government makes a claim against your property. The types of taxes include property, income, and others. This lien protects the governments interest in your personal property, real estate, and other assets. To enforce the tax lien, the IRS must file a Notice of Federal Tax Lien with the recorder of deeds, or the Secretary of State, depending on laws where you live. This notice essentially makes your lien public information.

Can You Sell A House with a Tax Lien?

The simple answer is yes. Yet, keep in mind that you must pay off the lien before closing the sale. The amount owed will be added to your expenses during the closing. Though, this may cause some problems during the selling process. Since the lien is on the title report, some buyers may hesitate or not want to get involved with the purchase. They may think some other debts or issues will arise down the road.

So, your best option is to clear the tax lien before listing your home for sale. If you cannot do this, here are some other options you can consider.

Remedy the Lien

Of course, paying the amount is the easiest option. However, some people can’t do this, so you may want to consider filing for Chapter 13 bankruptcy. This process won’t clear the debt, but it does provide you with negotiating power. After you’ve filed, the IRS may have empathy and give you a payment plan that covers a period of time.

Dispute the Lien

If you believe the lien was wrongly placed on your property, you can dispute the claim. You’ll begin by contacting the creditor to see if they will release the lien. If the request is denied, you can take them to court, and it will be released if you win. Even if you don’t win, the creditor may be willing to negotiate a settlement. This won’t clear the debt completely but could lower it.

Increase your Selling Price

If the house is worth it, you could always try to add the amount of back taxes owed into the selling price. You’ll have to be sure the local market will support your price, as no one will buy a home priced over fair market value.

Sell the House for Cash

If you have a lien and want to sell your house fast your best option is to sell the home for cash. There are lots of companies that buy houses for cash. The best part is they buy them “as-is”, the sale can be complete in as little as a week, and you don’t have to pay realtor commissions.

In the end, just be sure to weigh all of your options. The lien won’t magically disappear, so you should try to be proactive and come up with a plan to either pay it off or choose another solution.

Leave a Reply

Your email address will not be published. Required fields are marked *