Can I Sell My House Despite a Tax Lien?

If you forgot to pay your property taxes, federal income taxes, or state income taxes, the federal government or your city or state government may have placed a tax lien on your house. That lien is designed to ensure that the government gets the money you owe and haven’t yet paid. Unfortunately, that lien also prevents you from taking any profits from the sale of your home until you’ve paid the lien off.

Even more unfortunate is the fact that the government will impose additional penalties and fees for nonpayment. Even a relatively small lien can become much, much larger if you ignore it. So if you currently have a tax lien on your home, it’s crucial that you get it sorted as quickly as possible.

How do you do that? Take a look at your options below.

Put Your House on the Market

Yes, you can sell your house even if there’s a tax lien on it. And if you’re strapped for funds to pay off the lien, selling might be your best option. But you have to have enough equity in your home so you can sell the property for a high enough figure to pay off both the lien and your mortgage. Before ownership can be transferred to the buyer, however, you must pay off the lien in its entirety.

If you don’t have enough equity in your home, though, you may not be able to pay off both your lien and the mortgage with the proceeds from the sale. If that’s your current situation, you’ll need to pay the tax lien before you can sell or petition the lien-holding government body to discharge your tax debt.

Sell Your House Fast to a Cash Buyer

When you list your home with a realtor, you’ll end up paying thousands upon thousands of dollars in fees. In Las Vegas, where the average home value is around $400,000, working with a realtor to sell your house will end up costing you somewhere in the ballpark of $25,000–$35,000. That’s a sizable amount of money, and depending on the size of your tax lien, that may very well be enough to pay the whole thing off.

That’s why working with a realtor may not be in your best interest. Instead, you can sell your house fast to a cash home buyer and avoid those pricey fees entirely. Cash buyers (also known as real estate investors) don’t take any commission fees when they buy your home. They also don’t charge any hidden fees, and any closing costs are built into the cash offer they give you.

You’ll be able to sell your home in as-is condition for fair market value, close on the sale according to your timeline, and keep more of your hard-earned money from the sale. You can then use the money you would have paid in realtor fees to pay off your lien and use the remaining proceeds to pay off the rest of your mortgage.

Apply for a Discharge or Subordination

Another way you can sell your house, even if it currently has a federal tax lien, is to apply for a discharge or subordination of the lien with the IRS. A discharge will remove the lien from your property, so you can sell the house and transfer a clear title to the buyer. If a discharge doesn’t work in your case, subordination may be a better option.

Subordination allows another creditor to move ahead of the IRS in priority. If you qualify, this route can allow you to refinance your mortgage, get enough money out of the loan to pay off the tax lien, and then sell your house.

Need to Sell Your House? Contact We Buy Houses Las Vegas

If you need to sell a house that currently has a tax lien, let our team at We Buy Houses Las Vegas help you out! We buy houses for cash, no matter what kind of condition it’s in, and we can close on the sale in a matter of days. To learn more or get started, give us a call today at 702-246-2000 or contact us online, and we’ll be in touch.