Can the IRS Put a Tax Lien on My House?

It’s a nightmare none of us want to find ourselves in, but when you are in deep with the IRS and have payments past due, it is likely that the IRS will put a tax lien on your home. A tax lien often puts us in a difficult situation as it makes it harder to sell our home or even to refinance and take out a second mortgage.

When will the IRS consider a lien on my house?

Often, the IRS will take this action when you owe more than $5,000 and they don’t think you will be able to pay in the given time, which is 10 years. By putting the tax lien on your property, the IRS is ensuring they will receive some form of payment from you at some point, even if you are unable to pay back the debt you are in within the statute of limitations.

Can the IRS take my home?

Many people receive a tax lien from the IRS and immediately think they are getting their home taken from them. This is not the case. By issuing a tax lien, the IRS is simply ensuring they receive a portion, or the whole, of your home sale, when and should you want to sell it. They in no way can force you to sell your home or to refinance. Unfortunately, this tax lien is public knowledge and can make it much more difficult for you to sell the home or to refinance as it will be placed on your credit. In fact, even after the lien is paid, you may still find it difficult to sell, buy or refinance a home as the lien will stay on your credit for seven years after it is paid off.

There are options for removing the lien from your credit after it is paid and an experienced tax attorney will be able to walk you through your options and help you fix your credit.

How can I get rid of the tax lien?

By law, the IRS is not allowed to put a lien on your home until they have sent out prior warning and the opportunity to pay the tax debt. Unfortunately, that warning usually only gives the taxpayer 10 days to come up with the money and pay their tax debt back in full. For those that are unable to do this, you do have a few other options.

• Sell your home: While it may not be ideal, sometimes the easiest way to release the lien is to sell your property. If you have enough equity in the home to pay off the tax debt, then the sale of the home will go to the IRS and you will be released of your lean. If you do not have enough equity, selling is still a good option: the IRS will often accept a partial payment and release the lien by using other assets to pay your debt.
• Request an installment plan: An installment plan is a payment plan that you can enter into with the IRS to pay off your debt. If you are able to make the monthly payments and have less than $50,000 in debt, the IRS will release the lien after the first three payments are made.
• Lien subordination: If you do not want to, or cannot, sell your home, you can consider a refinance. While it may be difficult to qualify for a refinance, if you do, you can let the IRS know that the money you saved from your refinance will go towards your tax debt and they will likely release the lien.

If you are in major tax debt and worried that you may soon receive a tax lien on your home, or have already received one, contact the experienced tax professionals at Levy & Associates. Contact us at 1-800-TAX-LEVY or visit our website to learn more.