A tax lien is a government-imposed legal hold on a property due to unpaid taxes, taking priority over other debts when the house is sold or refinanced. Homeowners facing tax liens may struggle to obtain loans and risk damaging their credit score. Neglecting to address a tax levy of more than $50,000 promptly can result in serious consequences, such as foreclosure or pushing you to sell a house fast in Milwaukee. Address the issue at the earliest to avoid future complications and financial hardships.
Two Types of Tax Liens
1. Property Tax Liens: When these are not paid, local governments can impose liens on the property or seize it to recover the owed amount.
2. Income Tax Liens: Built-up income taxes can result in tax levies issued by the IRS or state authorities, affecting all assets, including the house.
Consequences of Unpaid Property Taxes
- The government will confiscate your property.
- It can result in foreclosure and auctioning the house (Read more to avoid foreclosure).
- It can hurt your credit rating and future loan borrowing.
- You could end up in wage garnishment.
Stay in contact with the IRS authorities if you cannot pay outstanding taxes. They can create repayment plans to cover outstanding charges for retaining your ownership.
Can I Sell a House With Tax Levies?
Before addressing any other issues, resolve any burdens on your property. The amount will usually be taken from the sale proceeds. Homebuyers will likely require you to resolve the levies before closing to ensure a clean title transfer. Quickly paying the taxes can make the home-selling procedure smoother and make the property more appealing to buyers.
House sale with tax debt can be complicated but not impossible. If you do not have the funds to settle the pending tax amount on your property but still want to sell it, contact an experienced cash home buyer in Milwaukee.
Will the Buyer Find Out About the Tax Lien if I Hide It?
Homebuyers will find out about any liens on the house during a title search. Unpaid taxes tied to the property can deter potential buyers. Being transparent about liens upfront can prevent surprises during the purchase. The title company can help resolve any liens during closing, ensuring a smooth ownership transfer.
Ways to Clear a Tax Lien
- If you believe the tax lien is incorrect, you can take it to the IRS or relevant tax body with evidence to resolve it.
- File formal appeals or applications for reconsideration to resolve the issue.
- Consult a tax attorney to guide you through the dispute process correctly.
- Request a certificate of discharge to remove the federal tax lien from the property.
- Apply to the IRS to settle the lien amount after selling the property.
- A certificate of discharge assures buyers of no tax issues with the property being transferred.
- Clearing a tax lien is easiest by paying off delinquent tax in full, including interest and penalties.
- Payment arrangements can be made directly with the tax authorities if unable to pay in one transaction.
Communication with the purchaser or an agent is essential to ensure everyone understands how the lien will be cleared by closing.
At Sell House Fast MKE, we buy houses in Milwaukee and the surrounding areas. We have first-hand experience in purchasing properties with liens. The best part is that we will cover all the remaining tax amounts and selling costs during the closing.