Can I sell my house if the IRS has a lien on it?

The IRS describes a federal tax lien as the government's legal claim against your property when you neglect or fail to pay a tax debt. It protects the government's interest in all your property, including real estate, personal property and financial assets. It attaches to future assets acquired while the lien lasts. It may limit your ability to get credit. A lien is not the same as a levy. A lien is a claim against your property. A levy is an actual seizure. Many owners confuse them, and the difference matters when you plan a sale. A lien usually lets you keep the house while the claim stays on the record. When you sell, the claim is dealt with at closing. If you have received a notice of intent to levy, talk to a tax professional right away, since that is a different and more urgent stage. Ask whether any payment plan you have in place affects the sale.

If the sale price is high enough, the tax debt can be paid from the proceeds at closing, and the IRS releases the lien within 30 days after you pay. The title company needs a payoff figure from the IRS and should coordinate with the IRS before closing. If the debt is bigger than your equity, ask a tax professional about options.

The IRS lists alternatives to full payment. Publication 783 explains how to apply for a Certificate of Discharge from a federal tax lien, which can free a specific property. Subordination lets other creditors move ahead of the IRS. Withdrawal removes the public Notice of Federal Tax Lien. Each has conditions. A tax professional or tax attorney can explain which one might fit.

Collect the IRS notices you have received, including any Notice of Federal Tax Lien. Gather your recent tax returns and any payment plan paperwork. Ask the IRS for a payoff figure. Tell the title company and the buyer about the lien early. Ask a tax professional whether you should apply for a certificate of discharge using the process in IRS Publication 783, and how long that takes. Ask what the IRS needs to see from the buyer's side, such as the sales contract. Keep copies of every letter. After you pay, ask for the lien release and confirm that it was recorded.

Because the process involves the federal government, give yourself time. Kaizen Home Buyers buys houses as-is for cash, with no repairs and no agent commission. We make an offer within 24 hours and can close in 14 to 30 days or on your date. Call 267-329-0084. A closing that pays the IRS from proceeds has to be arranged with the title company. A listing with an agent is also possible if you have equity and time.