A tax lien is a hold placed on your property by the government (local or federal) if you don’t make your tax payments. While a tax lien does not change a property’s ownership initially, it does show that the property has a claim against it. This legal claim extends to everything you own including your house, car, financial accounts, and personal property.
If you have a tax lien pending, or one has been placed, don’t panic! This post will help you assess the situation and provide you with the options to remove a tax lien, or sell your house to a buyer that doesn’t mind buying a home with a lien on it.
And it all starts with learning the process of how a tax lien is placed on a home so that you can stop the tax lien from being placed, before the problems start.
The Tax Lien Process
The government uses a five step process for placing a tax lien on a home.
- The government reminds you of your tax debts with a notice of taxes owed and a demand for payment.
- Ten days later if you’ve not paid or have not made any attempts to resolve the lien, the lien will automatically take effect.
- A notice of the tax lien is then publicly recorded.
- If the taxes still remain unpaid, then the government can file a tax levy to legally take your assets as a way to collect the money you owe.
- Once the debt has been paid off, the government will release your lien within 30 days.
Having this information helps you to prepare yourself for the removal of the tax lien.
How To Remove A Tax Lien
Once a tax lien has been placed on your home, you have multiple options for getting it removed.
Ways to remove a tax lien include:
- Pay your back taxes plus the penalties.
- Also known as “discharging the property” where you clear the debts to remove the tax lien (source).
- Set up an IRS payment plan or a payment plan with your state/local government.
- Ask for an Offer In Compromise (OIC) which is an offer to settle for less than the amount you owe.
- File an appeal.
- Sell your house for cash (with permission) in a quick sale and pay off your tax debt.
- You likely won’t get as much money as the buyer will have to pay off the debt, but you also won’t have to deal with tax lien headaches.
- Request a dismissal of the balance in bankruptcy court.
The most important thing to remember if you get a notice that you owe property taxes is to not ignore it. Ignoring property taxes leads to tax liens, and that leads to trouble. If you find yourself with a tax lien and don’t want to go through the hassle of removing it, call us at . We buy houses for cash, including ones with liens, so that homeowners like you can put debt headaches behind them.