If you have A Federal Tax Lien on your home or a property that you are looking to sell, you can still sell the property but you will need to follow IRS rules regarding paying off the lien and may take longer to close the property escrow.
Can I Sell My House With A Tax Lien?
Yes you can sell the House with a Tax Lien. It may take a little longer(45 Days approx. for IRS plus normal closing time) as you will need to have IRS work on getting the Tax Lien Paid Off or Resolved during the closing process.
Can You List A Property If You Have A Tax Lien?
Yes, You are allowed to List the property that has a Tax Lien on it. You may need to disclose to Listing Agent and the buyer that the closing will take a little longer as you will need IRS to sign off on the docs so closing can take place.
Can You Close on Your Property Sale if You Have A Tax Lien?
Yes, You can Close on Your Real Estate Property Sale if you have a Federal Tax Lien on the property. As previously mentioned above, closing will take longer(Normal Closing approx. 30 days plus additional 45 days for IRS to review your documents pertaining to your Federal Tax Lien.
How Can You speed up the process of Selling my home with Federal Tax Lien?
If you want to speed up the process of selling the home with a Federal tax lien, then start working with your CPA, an Enrolled Agent or Tax attorney and have them submit appropriate documents with IRS before you even list the house. This way when the home is sold and it goes in escrow, your Tax Lien paperwork is already being processed and hopefully the lien is resolved before the sale of the home.
How to Get Rid of a Federal Tax Lien on your Home or Property?
Federal Tax Lien can be Disputed
If IRS made and error and you believe IRS didn’t have any basis for filing a lien in error then the Tax Lien Can be disputed. You have the right to request a Collection Due Process hearing. At this hearing, you can present evidence of why the federal tax lien is incorrect.
Resolve Your Federal Tax Debt
You can resolve your Federal tax debt by paying off full amount, through IRS Installment plan, or through an Offer in Compromise.
Offer in Compromise may not work if you have substantial value in your home that you are looking to sell or refinance. The IRS will only consider an Offer in Compromise to settle your tax debt for less than your amount due if you don’t have enough resources to pay off the tax due in full.
A CPA, EA or a Tax Attorney can help you decide whether offer in compromise will be a viable option or not.
Certificate of Discharge or Subordination
- A Certificate of Discharge removes the IRS tax lien from your home but transfers it to another property. The IRS will often grant a discharge if you have comparable property with enough equity to which they can transfer their claim.
You need to file form 14135 with IRS in order to obtain Certificate of Discharge.
- A Certificate of Subordination allows the Lender in the case of a home sale, typically a bank or mortgage lender — to move ahead of the IRS in the payoff process. This will allow a home sale to go through even with an active federal tax lien.
You need to file form 14134 with the IRS
Apply for Withdrawal
A withdrawal removes the federal tax lien from your property and allows you to sell your home, but it does not erase your tax debt.
See IRS Detailed video on step by step how to do the application for Lien Withdrawal by clicking HERE
Can You Get a Home Equity Loan With a Tax Lien
Yes you can as long as your lender is willing to work with you where IRS will either do Discharge or Subordination of the Tax Lien. What that means is that the Lender will have first lien on the property and IRS will either move the lien to another property or do the subordination.
Home Equity Loan with a Tax Lien may take longer but it is definitely doable with some hard work and diligent follow-up with IRS. See Resources below for publications and phone numbers for your to use.
Lien vs. Levy
Do you know the difference between IRS Lien vs. Levy? A IRS lien is not the same as IRS levy.
Where A lien secures IRS’s interest in your property when you don’t pay your taxes, A Levy actually takes the property or cash from your bank to pay the taxes past due.
If you don’t pay or setup an installment agreement for your outstanding taxes, the IRS can levy, seize and sell any type of real estate or Bank Balance, Vehicles, or other personal property that you may own.
Helpful IRS Phone Numbers and Publications
We have compiled a list of phone numbers from IRS website so its convenient for your to contact right department to resolve your IRS Lien issues.
Centralized Lien Operation : This number is to help resolve basic and routine lien issues: verify a lien, request lien payoff amount, or release a lien, call 800-913-6050 or e-fax 855-390-3530.
Collection Advisory Group — For more info regarding IRS Lien issues, including discharge, subordination, subrogation or withdrawal; Review Publication 4235, Collection Advisory Group Addresses
Taxpayer Advocate Service Tax Payer Advocate Service is independent organization within IRS that can help you when you cannot get help from normal channels. You can fill out for 911 call 877-777-4778.
Contact Information for the IRS