When dealing with tax debt, you may find yourself in a difficult situation if you owe money to the IRS. One of the ways that the IRS can try to collect the taxes you owe is to place a lien on your property. If you need to sell or refinance your property, this can create a problem.
In this blog, we’ll discuss the issue of dealing with an IRS lien when selling or refinancing when there is an IRS lien.
What Is an IRS Lien?
An IRS lien is a legal claim that the IRS places on your property when you owe back taxes. This is one way for the IRS to secure payment for the taxes that you owe. Essentially, an IRS lien is a public record that appears on your credit report. This can make it difficult for you to obtain financing for a home or other property.
Rules for Selling or Refinancing Property with an IRS Lien
It can be a complicated and stressful process if you’re looking to sell or refinance your property and there is an IRS lien. Fortunately, there are five rules you can follow to make sure the process goes as smoothly as possible.
Understand the Lien Amount
You need to know how much the lien is for and how much you need to pay off to clear the lien. This information can be obtained from the IRS lien notice or the local IRS office.
Pay the Lien
You can do this by obtaining a loan to cover the amount of the lien or by paying it out of pocket. Paying off the lien in full will help to ensure that the sale or refinance process goes as smoothly as possible.
Check the Status of the Lien
You should ensure that the lien has been released and is not still outstanding. This is important because an outstanding lien could cause problems when selling or refinancing the property.
Get a Title Search
This will allow you to determine if any other liens or encumbrances on the property could affect the sale or refinance process. A title search will also allow you to determine if any other parties are interested in the property.
Get Professional Help
If you are selling or refinancing the property with an IRS lien, getting help from a qualified professional is essential. This will help to ensure that the process goes as smoothly as possible and that you are not missing any crucial steps.
How to Remove an IRS Lien
If you can pay off the lien in full, the IRS will remove the lien from your property. This will allow you to proceed with selling or refinancing your property. The IRS will send you a Notice of Release of Federal Tax Lien to confirm that the lien has been removed from your property.
If you cannot pay off the lien in full, you may be able to get the lien removed through other means. You can apply to the IRS for a lien withdrawal if you demonstrate that the lien creates economic hardship. You can also try to negotiate a settlement with the IRS.
What Can I Do if I Can’t Sell or Refinance My Property?
Many homeowners are in a tough spot, unable to make their mortgage payments or sell or refinance their property. If you’re in this situation, what can you do?
The first step is to assess your situation. Do you owe more on your mortgage than the value of your property? Can you pay your taxes or other bills associated with your property? Knowing the answers to these questions will help you determine the best course of action.
When you face problems while making mortgage payments, the best thing to do is to contact your lender and explain your situation. Many lenders will work with homeowners to find a solution for both parties. This could include a loan modification, a forbearance agreement, or even a short sale.
If you owe more on your mortgage than the value of your property, you may be able to sell your home for a short sale. In a short sale, the lender agrees to accept less than what is owed on the mortgage. This is usually done when the homeowner can’t afford to make their mortgage payments and needs to sell the property quickly.
In Conclusion
Dealing with an IRS lien on your property can be a complicated and stressful process, especially if you need to sell or refinance your property. However, there are steps you can take to ensure a smoother process.
Understanding the lien amount, paying it off, checking its status, getting a title search, and seeking professional help can help. You may also get the lien removed through a withdrawal or negotiation with the IRS. Suppose selling or refinancing is not an option. Other solutions include loan modification, forbearance agreement, or a short sale.