Trying to sell your house with a tax lien can seem overwhelming. A tax lien is a legal claim that the government places on your property when taxes go unpaid, often related to property or income taxes. While a lien doesn’t remove your ownership, it does mean you must deal with the debt before you receive any money from the sale.
The good news is, you can still sell your house even with a tax lien in place. In many cases, you won’t have to pay it off upfront. This is especially true if you work with a cash home buyer or investor who understands the process and is prepared to handle liens during closing.
Understanding Tax Liens and How They Affect Your Sale
When you fail to pay your property taxes or income taxes, government agencies like the IRS or your local municipality can place a lien on your property. This lien gives them a legal right to collect from the value of your home. As a result, you won’t be able to refinance or sell freely until that lien is addressed.
However, a lien doesn’t mean you can’t sell. It simply means the tax agency wants to be paid from the proceeds of the sale. Many homeowners sell their homes and use part of the proceeds to pay off their debt. Others work with buyers who agree to pay the lien as part of the deal. Either way, with some planning, you can still move forward with a home sale.
Selling a Home with a Tax Lien: What to Expect
If you try to sell a home with a lien, the process is more complex. You’ll need to work with a closing attorney or escrow company that can ensure the lien is paid. Typically, any proceeds from the sale will first be used to pay off the mortgage, then the tax debt. Only after those are settled will you receive what’s left.
If your home has plenty of equity, this is a straightforward process. But if your debt exceeds the sale price, you’ll need other solutions. That could include negotiating a lower payoff with the IRS, arranging financing, or working with a buyer willing to deal with the lien.
In short, you can’t ignore the lien, it must be resolved before the sale is finalized.
Options for Selling With a Tax Lien
- Pay the Lien at Closing: If your house sells for more than you owe (mortgage + lien), the easiest option is to let the closing attorney pay the lien from the proceeds. You walk away free and clear.
- Request a Lien Discharge: You can ask the IRS or local agency to remove the lien from the house itself (but not from your name), so you can sell. The debt remains, but the property is freed.
- Subordinate the Lien: Request that the IRS reclassify the lien to be subordinate to your mortgage in priority. This doesn’t remove the lien, but it can make refinancing or selling easier.
- Negotiate a Reduced Payoff: If you’re under financial strain, the IRS or state may accept less than the full amount through an offer in compromise. This could let you settle the lien for less.
- Sell to a Cash Buyer or Investor: Cash buyers often specialize in buying homes with tax liens. They handle the paperwork and pay the lien at closing, so you don’t have to.
- Wait for the Lien to Expire: Rarely practical, but some federal tax liens expire after 10 years. However, the IRS usually renews them, so this is a risky and slow option.
Why Cash Sales Make Everything Easier
Selling your house for cash can remove many obstacles, especially if a tax lien is involved. Cash buyers don’t rely on mortgages or banks, so they can close much faster than traditional buyers. There’s no need to list the home on the market or deal with agents, open houses, or buyer inspections.
Most importantly, you can skip expensive repairs or updates. Cash buyers purchase homes “as-is,” which means you don’t have to worry about fixing damage or upgrading the kitchen just to make the sale happen. This is ideal if you're experiencing financial hardship, facing foreclosure, or going through a divorce.
Cash sales also avoid the 6% commission that real estate agents typically charge, meaning you keep more of the proceeds, after the lien and mortgage are settled.
How Cash Buyers Help You Sell Faster
Working with a professional home buyer means you hand off most of the stress. These companies are experienced in dealing with title issues and tax liens. They’ll order a title search, coordinate with the IRS or tax agency, and ensure everything is paid correctly at closing.
Because there’s no need for a buyer’s loan approval, you also avoid the risk of the deal falling through. Cash buyers rarely back out once the offer is made, and the entire process can be completed in a week or two. This kind of certainty is valuable when you're in a stressful life situation and need to move on quickly.
There are also fewer costs involved. You don’t have to pay for repairs, appraisals, inspections, or commissions. The result is a smooth sale with fewer headaches and more of your equity in hand.
What Happens at Closing?
When you sell to a cash buyer, the closing agent or escrow company will handle all the details. They’ll use the sale proceeds to pay off your mortgage and any tax liens. After those debts are cleared, you’ll receive the remaining balance.
You don’t need to come up with money out of pocket to pay the lien. It’s handled automatically at closing. This is especially helpful for sellers who don’t have savings or can’t afford to settle the lien upfront.
Once the lien is paid, it’s removed from your record, and the property title is transferred to the buyer without any issues.
Why Work with a “We Buy Houses” Company?
If you're looking to sell a house with a tax lien, working with a “we buy houses” company can be one of the most practical and stress-free solutions. These companies specialize in buying homes quickly and in as-is condition, regardless of whether a lien, foreclosure risk, damage, or divorce is involved.
Unlike traditional buyers, they don’t rely on mortgage approvals or inspections, so the process moves fast and with fewer complications. A key advantage is that these companies have a thorough understanding of complex title issues, including tax liens.
They work directly with escrow companies to pay off debts at closing, which means you don’t have to settle the lien out of your own pocket before selling. With flexible closing timelines and no need for repairs, they offer a hassle-free way to sell, even under challenging circumstances.
Move On with Peace of Mind
Selling a home with a tax lien doesn’t have to be difficult. With the right approach and the right buyer, you can get out from under the debt and move on with confidence. Cash buyers, like Aldric Property Solutions, make that possible by offering fast and flexible options that don’t require upfront payments.
Divorce, foreclosure, or back taxes can be overwhelming. But the sale of your home doesn’t have to add to your stress. Let us handle the lien and close quickly, so you can focus on the future.
Ready to sell your house with a tax lien? Contact us for a no-obligation cash offer. We’ll guide you through the process and help you close quickly, even if you’re behind on taxes.