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Can I Sell My House With a Tax Lien?
When you’re living with substantial debt, you may find that paying federal, state, or local taxes isn’t financially feasible. But if you fail to pay your taxes, the government can place a lien on your property — which is a claim against your assets — because you owe a debt.
If you learn you have a tax lien on your home, and you’re looking to sell it, you will not be able to profit from the sale of your house until you satisfy (pay off) the debt you owe. And while it’s possible to sell a house with a tax lien, there are only a few options for doing so. It’s also in your best interest to begin the selling process as soon as possible after you learn of the lien to avoid incurring additional penalties and interest.
Read on to learn about the handful of ways you can sell your house with a tax lien.
Request a Discharge
If you have a federal tax lien on your property, you can request a certificate of discharge from the Internal Revenue Service. In certain situations, the government will grant a partial release or may allow a discharge, which will release the property, not the lien.
If you’re granted a discharge or partial release, the lien will still be attached to you, and you’ll still owe the tax debt. But because your home is no longer attached to the lien, you can sell it, make a profit, and use that profit to satisfy your tax debt.
Sell Your House on the Open Market
When your house has a lien on it, you can still list it on the market — there’s no rule preventing you from doing so. But before you can pocket a profit from the sale, you must pay off the lien. If you choose to list your home with a realtor, and your house ends up selling, you’ll need to pay the lien amount before the sale can close and your buyer can receive a clear title.
While taking this route seems simple and straightforward at first glance, it has a major potential drawback. When you sell your house with a realtor, you’ll inevitably end up paying about 10% of the final sale price in fees.
Fees Associated With Selling on the Open Market
When you work with an agent, you must pay realtor commissions — which typically amount to 5%–6% of the selling price — and that fee is deducted from the final sale price. You must also pay closing costs and additional fees, which may include a brokerage fee, escrow fee, transfer taxes, title insurance, and others, depending on your situation.
In addition to paying all those fees, you’ll also need to pay back your mortgage in full when you sell the house. Coupled, those expenses can eat up a substantial chunk of your revenue from the sale. After you pay those costs, you may be left with a relatively small profit or no profit at all if you don’t have substantial equity in your home. You’ll then need to use some or all of the profit you make to satisfy the lien before the buyer can get a clear title.
Sell Your House to a Cash Home Buyer
Whether you want to sell your house fast (as in, a few days to a week or two) or you need some time to plan your next move in life, it may be in your best interest to get an offer from a cash home buyer. Cash buyers are almost always real estate investors, so they have the capital on hand to pay you up front — in cash — for your house.
These types of buyers can purchase any house, regardless of what kind of condition it’s in and what it looks like. If your house needs serious repairs and likely wouldn’t sell on the open market, a cash buyer may be your only reasonable option.
When you sell to a cash home buyer, you don’t pay realtor commissions or any additional selling fees. When you get an offer, the number you see on that offer is the amount of cash (not necessarily profit) you’ll get when you sell your as-is home.
Even with a tax lien on it, a cash home buyer can purchase your house, but the amount of the lien will most likely be included in the offer. Because the lien is attached to the property, the buyer will then satisfy the lien and obtain a clear title after purchasing the home.
We Buy Houses for Cash in Omaha, Nebraska
If you have a tax lien on your Omaha property and are looking to sell your house fast, reach out to our team at Beard Bros Buy Houses Cash today. We buy houses in record time and can make you a cash offer on your house in as little as 24 hours after you call us. In most cases, we can close on the sale of your home in a matter of days.
To request a cash offer or learn more about how we work, give us a call today at 402-810-8091 or contact us online, and we’ll be in touch right away.