Have you failed to pay any one of your federal or state taxes for years, and you were recently served with a tax lien on your Perry home? Taxes in the United States can be confusing even if you’re dealing with just the basics — income and property tax. This is very common, especially among first-time taxpayers. On the flip side, some also fail to pay taxes due to financial struggles, which is still a sad reality for many Americans.
If you’re in any of the situations above and you feel that selling your house is the best way to pay for your tax debts, don’t worry, this article has got your covered.
What Is A Property Tax Lien?
To start off, let’s understand first what a tax lien is. A tax lien, whether federal or state-issued, is a government’s legal claim on your property if you fail to pay your taxes. While it can result in your home being sold through a tax sale, it doesn’t always come to that. If your home has a tax lien, it means that part of your equity or net income from your home sale will go to the institution that issued the lien.
There are different types of taxes, and if you failed to pay any of them, the government has the right to put a lien on any of your assets that have significant value. To give you a better example, if you missed to pay a large amount of your income tax, the government can require you to repay that through the sale of your home.
Some of the most common types of tax liens include:
- Federal Tax Lien – At the individual level, there are about four(4) types of taxes that you need to file yourself: income, capital gains & dividends, estate & gifts, and property taxes. These are different from excise & consumption taxes that are automatically added to the products/services you buy.
- Property Tax Lien – different States have different property tax rates. If you fail to pay property tax in Georgia, the State Government can impose a tax lien on your home.
- Judgement Liens- a court directive that entitles any creditor to take possession of a debtor’s property. Again, this can be any creditor, not just your mortgage lender.
Can You Sell Your Home With a Tax Lien?
The simple answer is yes. You can sell your Perry home even if it has a tax lien. However, we don’t usually recommend that you resort to selling your home to pay for your tax debt, immediately. There are ways to get your tax lien removed and if they work for you, you get to keep your home!
Effects Of a Tax Lien On Your Home Sale
If you decide to sell your home with a tax lien, it’s good to be familiar with its implications.
- Additional things to do. Before selling your home, it is your responsibility to inform everyone who has a lien on your property that you are selling the home. This is similar to when a mortgage lender decides to sell a property through a foreclosure sale. Essentially, after selling your home and paying your tax debts, the debtor will issue a withdrawal notice, erasing your lien. It is important to erase your liens because this will reflect badly on your credit report.
- Lesser net profit. If you have one or more liens on your property, you’ll have to pay all of them. So supposing your home’s total purchase price is $200,000, you owe $130,000 on mortgage, and you have tax liens amounting to $25,000; that leaves you with $50,000 to cover closing costs, commission fees (if you sell with an agent), appraisal fees, and other necessary fees.
How To Sell Your House With a Tax Lien
If you noticed, selling your home with a tax lien isn’t really that tiresome. There’s nothing that could stop you from selling your Perry home, regardless if you choose to list it on the market or sell it privately off the market. And here are some effective tips to sell your Perry home quicker:
- Check If Your Equity Is Enough
You found a buyer, walked through all the necessary inspections, and ready to close a deal, only to find out that your price will not cover all the liens/claims to your property. So if your main intention of selling your Perry home is to pay off all your tax debts, you have to know first whether your home’s market value will give you enough equity to fund your debts. If not, you can start looking as well for alternative ways to pay them off apart from selling your home.
2. Request For A Certificate of Subordination
A Certificate of Subordination is a legal document from the IRS that allows other debtors/liens to claim ahead of them. This means that you’ll only have to pay the IRS once you’ve paid all your other creditors. This is very useful if your equity is not enough to pay all your creditors and it will buy you time to find other sources of funds.
3. Look For a Fast Buyer
Who doesn’t want a fast buyer anyway, right? But we emphasize it here because the longer you keep a lien, the longer it will tarnish your credit performance.
The better news is, if you’re open to selling your home off the market, Spire Home Buyers is here to support you! We buy houses in Perry for cash and we can close a deal within 7-14 days because we will buy your Perry house as is! Unlike many other professional home buyers, we always offer a fair price to homeowners because we understand your needs genuinely and we’re here to help you out.
To learn more about our “sell my Perry home” services, contact us at (678) 318 – 1801 or send us a message via the form below. Looking forward to hearing from you!