Behind on Taxes? Federal Tax Liens and your Property

Selling a home with a federal tax lien in place on the traditional real estate market is no easy task.  If there is a lien on your property, it will follow your property until you or the new owner pay the back taxes in full.  The expense and complication of a federal tax lien dramatically limit your pool of potential buyers.

What is a Tax Lien

A federal tax lien is the last resort for the Internal Revenue Service to attempt to collect back taxes.  You can have a tax lien placed on your property if you owe any federal taxes such as income tax, gift tax, estate tax, and unemployment tax. Unlike a foreclosure, there is no public notice of a federal tax lien.  The IRS sends a formal notice of your past due to balance, and then if you are unable to pay, lays claim to your property in the form of a lien.

Why Buyers Don’t Want a Lien

Buyers aren’t interested in homes with liens because of the additional cost and typical condition of homes with a tax lien.

Additional Time + Cost: The lien follows the property, even when it transfers ownership.  So, in addition to a down payment; the new homeowners will have to pay the outstanding taxes on the home.  In addition to the money required to settle the debt, many new homeowners don’t want to have to go through the lengthy process of settling the lien with the IRS.  Investing time and money into someone else’s tax debt is not high on the list for most new homeowners.

The condition of the Home:  If a home is listed for sale with a lien in place, the homeowner is suffering from some financial hardship. Homeowners prefer move-in ready homes so much, according to the chief economist at Zillow: “the average home buyer will pay $15,000 more for a house that’s move-in ready than they will for a house that needs $5,000 worth of work.”  

Sell to Real Estate Investor Experienced in Tax Liens

Real estate investors have experience working with homes in a variety of financial situations.   Real estate investors have the skills and knowledge to see beyond the tax lien and offer you a fair price for your property.  Put that experience to work for your situation.

Sell to a Local Cash Buyer

Selling to a local cash buyer allows you to sell your home fast without any additional time or money investment. If you decide you want to sell your house for cash, we hope you will consider contacting Central Illinois Houses Buyers. We can help you put a bad situation behind you and get on with your life regardless of the issue, job loss, death, divorce, deteriorating or unsafe neighborhood, foreclosure, lien or judgment, excessive deferred maintenance, or just wanting to make a fresh start.  Please give us a call and see if we can help.