Can I Sell My House With a Tax Lien?
Selling a house is already a complex process, but it becomes even more challenging when there’s a tax lien on the property. A tax lien can make things seem daunting, but it doesn’t mean you’re stuck with the house indefinitely. Yes, you can sell a house with a tax lien on it. However, the process is different from a regular home sale, and it may require more planning and negotiation.
If you have a home in Las Vegas with a tax lien, knowing the best way to navigate the sale can save you a lot of time, stress, and money. This blog will explain the options and strategies available to help you sell your house, even if there’s a tax lien attached to it.
What Is a Tax Lien?
A tax lien is a legal claim placed on a property due to unpaid taxes. It’s essentially the government’s way of securing its interest in your property to ensure tax debt is paid. The lien could be due to unpaid federal taxes or even local property taxes. In either case, the government has a stake in your property until the debt is settled.
While having a lien doesn’t prohibit you from selling your house, it does mean that the lien must be addressed as part of the sale. This is because when you sell the property, the buyer must obtain a clear title, and a lien disrupts that by acting as a cloud over the property.
Yes, You Can Still Sell Your House
Despite the tax lien, you have the right to sell your home. However, you will have to handle the tax lien before the sale can be finalized. This may involve paying off the lien with the proceeds from the sale or negotiating with the IRS to resolve the debt. Even if you owe a large amount, the sale can proceed if you follow the right steps.
In Las Vegas, many people face similar issues, especially in a competitive market where selling fast can be critical. Companies that say “we buy houses” offer an opportunity for homeowners to sell their properties, even if they are dealing with tax liens.
Options for Selling a Home With a Tax Lien
Let’s break down the various options you have for selling a house with a tax lien:
1. Pay Off the Lien Using Equity
If your home has enough equity, you can use the proceeds from the sale to pay off the lien in full. This is the most straightforward solution. The closing agent can take the proceeds from the sale and pay off the lien at closing. Once the lien is paid, the title will be cleared, and the buyer can take ownership without any issues.
2. Settle the Debt With the IRS
Sometimes, homeowners may not have enough equity in their property to fully pay off the lien. In these cases, you can contact the IRS to negotiate a settlement or payment plan. By doing this, you may be able to pay a smaller amount than the full debt, which can help speed up the sale process.
In some instances, the IRS may issue a Certificate of Discharge or Certificate of Subordination. A Certificate of Discharge removes the lien from your property, while a Certificate of Subordination allows the sale to go through by placing another creditor (like the mortgage company) in priority ahead of the IRS for payment.
3. Negotiate a Payment Plan
If paying the full lien is not feasible, you may be able to negotiate a payment plan with the IRS. The IRS might allow you to enter into a payment agreement, known as an Offer in Compromise. This lets you settle the lien for less than the full amount owed, especially if you can demonstrate financial hardship.
While the tax lien won’t be fully released until you’ve paid off the amount agreed upon, you can still proceed with the home sale, knowing that the IRS will receive payment from the sale proceeds.
4. Apply for a Withdrawal
Another route is applying for a withdrawal of the lien. With this option, the tax lien is removed from the property, but the debt remains. This allows you to sell the home without the lien holding up the transaction. However, you will still owe the IRS and need to work out a plan to repay the debt.
5. Wait for the Lien to Expire
Tax liens typically have a statute of limitations, often around 10 years. After this period, the lien may expire, and the IRS will no longer have a claim on your property. However, this is a long shot, as the IRS can extend the statute of limitations under certain circumstances, especially if the amount owed is significant. If your lien is nearing its expiration, this could be a viable option, but it’s essential to consult a tax expert.
Working With a Cash Home Buyer
One of the quickest ways to sell your home with a tax lien is by working with cash home buyers. These buyers are often able to close quickly and are used to dealing with properties that have liens or other encumbrances. Cash buyers in Las Vegas, like We Buy Houses Las Vegas, offer a convenient way to sell your property fast without worrying about traditional buyer concerns, such as financing contingencies.
When working with a cash buyer, the tax lien will still need to be resolved, but these companies are experienced in navigating these issues. They’ll help facilitate the lien payoff, making the process smoother for you.
How to Handle the Lien at Closing
If you’re selling your house with a tax lien, the most common scenario is to handle the lien at closing. Here’s how it works:
- The closing attorney or title company will collect the sale proceeds.
- From these proceeds, they will pay off the lien directly to the IRS or local government.
- Any remaining amount will go to you or any other creditors, such as a mortgage lender.
This method ensures that the lien is fully satisfied and removed from the title, giving the buyer a clear, marketable title. It also gives you peace of mind knowing the IRS is no longer seeking payment.
Takeaways for Selling a Home With a Tax Lien
Selling a house with a tax lien in Las Vegas doesn’t have to be complicated, but it does require planning. Whether you pay off the lien using equity, negotiate with the IRS, or work with a cash home buyer, you have options to successfully sell your property. If you’re unsure about the best course of action, consulting with a tax professional or real estate attorney can provide valuable insights and help ensure you follow the correct procedures.
By addressing the lien head-on and considering your options, you can sell your house quickly and move forward, leaving the burden of the tax lien behind. If you’re looking to sell a home in Las Vegas with a tax lien, you can take the first step toward a fast, easy sale by contacting We Buy Houses Las Vegas at 702-246-2000.