Can You Sell a House with a Tax Lien on It?

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January 2nd, 2019

Selling your house under normal circumstances is challenging to say the least. Even if you have all the time in the world and it’s a perfect seller’s market, it can be tough to sell your house.

Now, imagine you’re in a hurry to sell your home because you’ve lost your job, have gotten divorced, or just find yourself in a lot of debt.

Your stress level is sure to skyrocket.

Worse yet, what if you’re trying to sell a house with a tax lien on it?

Can this even be done?

If you find yourself with a tax lien on your house, and you’re trying to figure out how to sell it, read on.

Today we’re going to take a look at what a tax lien is and discuss how to go about trying to sell a house with a tax lien on it.


What is a Tax Lien?

If you fall behind on your taxes and owe a significant amount to the IRS, they’ll establish a tax lien on some or all of your assets.

This is their way of trying to get back what you owe them. You can either pay them what you owe in taxes, or they’ll seize the assets they’ve placed liens on, which may include your house.

Liens are a way for lenders or other entities like the IRS to ensure people pay up when they’re supposed to. When people don’t make good on what they owe, they place liens on your assets as a warning.

If you fail to pay what you owe, these entities will eventually take away the assets with liens on them to settle your debts.

Take a look at a few facts about tax liens on your house you should be aware of:

  • Federal and state tax liens are a higher priority than all other liens, meaning payment (whether in cash or using your assets) will pay off those liens first
  • Mortgage lenders don’t like to approve sales of homes with tax liens because they know they are not a priority and chances are slim they’ll get their money back to settle the mortgage loan
  • If you sell a house with a tax lien on it, the buyer might have to pay off your debts, which of course they don’t want to do
  • People that are okay with buying houses with tax liens on them will try to negotiate for lower sale prices because they know you’re in a bad situation

If your house has a tax lien on it, it will be difficult to sell for many reasons. To start, there are not a lot of experienced real estate agents out there prepared to negotiate the sale of a house with a tax lien.

In addition, mortgage companies and buyers don’t like the idea of tax liens. And if by chance you can convince the lender and buyer to sell/purchase your house, you risk staying in a financial crisis, even after closing.

Of course, this is not to say it can’t be done. Because yes, you can sell your house with a tax lien on it. But you’ll need the help of an expert. And at the very least should be knowledgeable about how to go about the selling process.


How to Sell a House with a Tax Lien on It in MN

Although your best bet when it comes to selling your MN home with a tax lien on it is to clear up the lien before selling, that’s not your only option.

That said, here are the steps you should take when trying to sell a house with a tax lien on it.


1. Evaluate the Tax Lien

The first thing you’ll want to do is evaluate the tax lien that’s on your house, so you know how much financial trouble you’re in.

There’s a chance you might have more than one type of lien on your property:

  • Home Loan Liens. This includes a mortgage lien because you haven’t paid the mortgage, home equity loans, and HOA liens.
  • Government Liens. Property tax, weed cutting, child support, Medicaid, and IRS tax liens all fall under this category.

Knowing which type of liens you have against your property will help you devise a plan of action for settling them and selling your house.

The best way to check for liens on your property is to request a copy of your home’s title.


2. Handle the Tax Lien

From there, you’ll have several options for settling the tax lien on your property, either before or after you sell your house:

  • Contact the IRS and pay the debt in full before you sell your house. This is your best option for getting the lien removed from your property.
  • Negotiate a payment plan with the IRS that can extend beyond the sale of your house. This may include a partial or full removal of the tax lien.
  • Convince your mortgage lender and the IRS to let you begin the short sale process (and pay off your tax debts after the sale of your home).
  • Apply for a lien release 45 days or more before the sale of your home. This way, you can sell your home to people without the lien attached. You will still owe the IRS for the debt you’ve incurred and any other tax liens on other property will remain. This means any sales proceeds leftover after paying off the mortgage will be applied to your tax debt.
  • Wait for the lien to expire. Unfortunately, if you’re in a hurry to sell your house, this does you no good because Federal liens take 10 years to expire.

If none of these options work for you, move on to the next step, which is hire a professional to help.


3. Get Help from the Experts

If your MN home has a tax lien on it, you can help from experts in two ways.

The first is to contact people experienced in negotiating with creditors and entities placing liens on property.

An expert can help you with what to say to the IRS while trying to negotiate a deal. Now, the IRS is not known for making deals; one way or another they will get their money. However, an expert might be able to help take some of the financial burden off you by setting up a reasonable and long-term payment plan.

In addition, an expert in dealing with property liens may be able to convince the IRS that once your MN home is sold, the proceeds from the sale will cover your debt. If the IRS is confident they’ll get their money, they’re likely to be more lenient on you by releasing the lien on your house.

The second option is to sell your house “as is,” tax liens and all. Many real estate agents and buyers will see your tax lien as a problem. As a result, sometimes the only option you have is to sell your property “as is” to a qualified company with expertise in dealing with troubled properties that need to be sold quickly.


Contact Homestead Road

If you find yourself wanting to sell your house with a tax lien on it, and don’t want to deal with inexperienced real estate agents or scared buyers, contact Homestead Road for a quote on your home.

We understand that sometimes life happens and taxes, or other debts, can’t get paid on time. We also know that sometimes selling your house as fast as possible is the only solution.

We’ll assess your home and present a reasonable and fair all-cash offer that you can agree to immediately. There’s no need to clean your home or make repairs. Simply let us see your home, and we’ll give you the best offer possible, knowing that there’s a tax lien on it.

Of course, if the sale goes through, you’ll either need to pay off your tax debt with any leftover money or have a payment plan in place before closing. The IRS will not remove a tax lien and let you transfer ownership of your home from yourself to us without a plan in place, which includes a lien release.

However, we won’t run away when you present us a home that has a tax lien on it. After all, we know what it takes to get the liens released. And at the very least, we know that after buying your property, the lien will be gone and you’ll be on your way to making good on your taxes, so you can move forward with your life.

So can you sell a home with a tax lien on it in MN? With experts by your side helping you along the way, absolutely.

Selling your home with a tax lien on it can be a long and complex process. But with Homestead Road it doesn’t have to be.

So, get in touch with us today and see how we can help you get out of your troubled financial situation and moving forward towards bigger and better things.