If you owe back taxes, the government may place a tax lien on your property. This can make it difficult to sell your home, as the lien must be satisfied before the property can be transferred to a new owner. However, selling a home with tax liens is possible with some effort and planning.
Here’s what you need to know about selling your home with tax liens:
Understand the tax lien process
When you owe back taxes, the IRS or state tax agency may place a lien on your property, which gives them the right to collect the debt by selling your property if you don’t pay the debt. The lien is public record and can affect your credit score and your ability to sell your property.
Work with a tax professional
If you owe back taxes and have a tax lien on your property, it’s important to work with a tax professional to understand your options. They can help you determine if you’re eligible for any tax relief programs or if you can negotiate a payment plan with the IRS or state tax agency.
Consider a short sale
A short sale is when you sell your home for less than what you owe on the mortgage. This can be an option if you owe more on your mortgage than your home is worth, or if you can’t afford to pay off the tax lien in full. However, the IRS or state tax agency must approve the sale and agree to release the lien on your property.
Pay off the lien
Paying off the tax lien is the most straightforward way to sell your home. If you have enough equity in your property, you may be able to pay off the lien from the proceeds of the sale. If not, you may need to pay off the lien with personal funds or take out a loan.
Sell to a cash buyer
If you need to sell your home quickly and don’t have time to pay off the tax lien, selling to a cash buyer may be an option. Cash buyers are investors who can close quickly and are willing to purchase a property with liens or other issues. However, you should be aware that selling to a cash buyer may result in a lower sale price than if you were to sell on the open market.
Selling a home with tax liens can be a complex process, but with the right guidance and planning, it is possible. Work with a tax professional and consider all of your options before deciding on the best course of action for your situation.
DISCLAIMER:
Please note that the information provided in this article is for general guidance only and should not be considered legal, financial, or tax advice. The author is not a lawyer, financial advisor, tax consultant, or any other professional that can provide legal, financial, or tax advice. Please consult with a qualified professional in your area for advice specific to your situation.