Too sell a home with an IRS tax lienA Lien is an encumbrance against the property, which may be voluntary or involuntary. There are many different kinds of liens, including a tax lien (for unpaid federal, state, or real estate taxes), a judgment lien (for monetary judgments by a court of law), a mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. lien (when you take out a mortgage), and a mechanic's lien (for work done by a contractor on the property that has not been paid for). For a lien to be attached to the property's title, it must usually be filed or recorded with a local county government office.A Tax Lien is a lien that is attached to property if the owner does not pay his or her real estateReal Estate is land and anything permanently attached to it, such as buildings and improvements. taxes or federal income taxes. If overdue property taxes are not paid, the owner's property might be sold at auction for the amount owed in back taxes., you should remove the tax lien before closing the deal.
Q: I am an enrolled agentAn Agent is an individual who acts on behalf of a consumer. A real estate agent represents a buyer or a seller in the purchase or sale of a home. Licensed by the state, a real estate agent must work for a broker or a brokerage firm. An insurance agent helps a consumer purchase an insurance policy. Insurance agents are also licensed by the state. with 20 years of practice, and 30 years working for the IRS. I thoroughly enjoyed your recent article dealing with IRS liens. I had a few thoughts to add.
A federal tax lien is generally self-cancelling after the tolling of the statutory period, which is usually 10 years from the date of assessment.
If the statutory period for collection is extended, by offer in compromise, waiverA Waiver is the surrender or relinquishment of a particular right, claim, or privilege. etc., the IRS has 30 days after the normal date of cancellation to refile a lien to protect the government’s interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. and maintain its priority to assets.
Where the lien has to be filed, which depends on state law, changes the effect of the lien. An example of this would be in a state requiring filing in the county where the property is located. A lien filed there would not affect property in the next county. A filing in the superior court of the taxpayer’s state would affect property anywhere within that state.
In cases where the delinquent taxpayer does not have sufficient equityYour share of ownership in a company. Stockholders are often referred to as equity investors, because they invest in the equity of a company. in their property to satisfy the lien, the IRS can, after investigation, issue a specific discharge for the lien on that property. This will allow the property to be released from the effect of the original lien, but still maintain the government’s priority.
A: Thanks for adding to our knowledge of IRS liens. We’re sure you’ve seen more than your fair share in your 50 years of working experience.
We also wanted to expand a bit on your reply to say that a tax lien in one state may work differently than in another state. If you are trying to sell property with an IRS tax lien, you should know how that lien affects the titleTitle refers to the ownershipOwnership is the absolute right to use, enjoy, and dispose of property. You own it! of a particular piece of property. to your home well in advance of trying to sell the home.
If you are selling your home in a short sale, you will want to work with IRS in obtaining the necessary documentation from them at the same time you are working with your lenderA Lender is a person, company, corporation, or entity that lends money for the purchase of real estate. to get the short sale approved. If you don’t work with the IRS and lender together, you can find yourself in the unfortunate position of having your lender approve the short sale but being unable to close due to a failure to have the necessary documents from the IRS to get the home sold.