Tax issues can cause a lot of uncertainty when it comes to your finances. Many people with outstanding taxes feel they could be a target at any moment. A tax lien is one of the most worrying things the IRS can level against you, but your back isn’t up against the wall if you have a lien leveled against your property. In fact, if you work with the right professionals, you may still even be able to sell a house with a tax lien on it. Here is what you need to know.
A basic tax lien is a document filed by the government alerting the general public that you have an unpaid debt through a certain entity. The obvious one most people think of is a federal tax lien. However, you can also have a lien put against your property if you are behind on state taxes, property taxes, or even homeowner association fees, too.
In fact, Fred Croop, a certified personal accountant and dean of professional studies and social sciences at Misericordia University in Dallas, PA mentions that “In general, I would probably rather have an IRS tax lien on me than a state municipal one right now.” There are stories of people out there losing their homes over a few hundred dollars in back county and city taxes, but these aren’t the norm. Part of the reason why state liens may be concerning is the fact that they can vary. For federal tax liens, the most likely immediate consequence is a large credit hit, as much as 100 points.
Should your lien graduate to a tax levy, you have a lot more to worry about. A tax levy is a formal legal seizure of a property to pay off your tax debts.
Note that there is still a way to get out of your tax lien by selling your home, but there has to be one very important provision: your lien has to be greater than the amount of equity in the house. If this is the case, you can sell the loan by getting a federal tax lien certificate of discharge. However, this requires a lot of time and work with the IRS, and there are a lot of issues here. For one, your poor credit may hurt your chances of finding another place to live. If you are in a dire financial situation, you may not have the time to work with the IRS then a real estate agent to sell your house.
There is another method—though. You can sell a house with a tax lien on it also if you are willing to sell as-is. In this case, you can pay your debts with a portion of the sale. Professionals can help walk you through the process of working with whoever is holding your lien.
A tax lien on a home is a scary situation for anyone to deal with, especially if they have a history of financial problems. In some cases, selling your home quickly can not only get you out from under this issue but give you a quick infusion of cash to get back on your feet. To make this happen, you need the help of companies like HomeGo are a perfect match. We can help you sell your home quickly —at a fair price— while avoiding the issues you may have trying to sell a home with a tax lien through a real estate agent or other avenues.