Can You Sell Your House With a Tax Lien?

Selling Your House With a Tax Lien

Discovering that government has placed a tax lien on your house has probably caused you no small amount of stress. After all, no one likes being in debt or living with the threat of the government seizing their home. If you’re looking for ways to resolve the back taxes you owe, selling your home may look far more attractive than the alternative of negotiating with the IRS or filing for Chapter 13 bankruptcy. But is selling a house with a tax lien even possible?

The good news is that you can certainly sell your property despite the lien on your house. However, before you buy the “For Sale” sign, it would be worth noting that selling a house with a lien on it is typically more complicated than a traditional sale. That’s why we at Fifth Avenue Property Group have put together this convenient guide to help you through the process.

What Is a Tax Lien?

If you haven’t paid property or income taxes, the government can place a lien on your house as a way of ensuring they’ll eventually manage to recoup at least part of what you owe. A lien indicates to creditors that the government has legal right to claim your property should they so desire, making it difficult for you to obtain further loans.

Depending on the kind of taxes you owe, your house may have a:

  • Property tax lien
  • State tax lien
  • Federal tax lien

Having a tax lien on your home doesn’t necessarily mean that a repossession is imminent, though the state or federal government can certainly repossess your home moving forward, if they feel that’s the only way to recoup their losses.

Is Selling Your House Possible With a Tax Lien?

No one will stop you from listing your house when there’s a lien on it. But actually selling your house? Well, that usually proves more difficult with a lien. Since tax liens follow the property, not the homeowner. This means that failing to discharge the lien after your sale could result in the home being seized from the new homeowner.

As you can imagine, this will scare off many potential home buyers. So, when you go about selling a house with a lien, you need to make sure you have enough equity in the property to cover what you owe your mortgage lender, the government, and realtors or brokers, after the sale is complete.

How Should You Go About Selling a House With a Lien on It?

Start by calculating how much money you owe your mortgage lender and the government. Using this number, determine how much you need to sell your home for in order to settle your debts and walk away in the clear. Don’t forget to account for fees, closing costs, and transfer taxes, all of which will cut into your earnings after your property sale goes through.

If the price you need to get for your home is comparable to its value, then you can go about selling your house with the idea of settling the lien. Typically, homeowners go about this in one of three ways, by:

While partnering with a realtor is the conventional approach, oftentimes the thought of commissions eating into a home’s already limited equity pushes homeowners towards other approaches. A reputable property group may serve as a viable alternative, as many of them will cover closing costs and transfer taxes to maximize your returns.

Get Started Today!

If you live in the Pittsburg area, Pennsylvania’s own Fifth Avenue Property Group would be happy to help you sell your house to settle your lien. Contact us today to receive your no-pressure estimate.

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