If you’re a homeowner in Elkins Park, PA, and you’ve received a notice from the IRS about a tax lien, you’re probably feeling overwhelmed. IRS tax liens can complicate life—especially if you’re trying to sell your house. The good news? Yes, you can sell your house even with an IRS tax lien, but you’ll need to understand your options, the process, and the potential roadblocks.
In this guide, we’ll break down how tax liens work, how they affect your ability to sell, and most importantly, what steps you can take right now to move forward. Whether you’re facing foreclosure, dealing with unpaid taxes, or simply want to sell fast, this guide is tailored for homeowners in Elkins Park who are dealing with IRS tax liens.
What Is an IRS Tax Lien?
Definition and Legal Implications
An IRS tax lien is a legal claim by the federal government against your property when you neglect or fail to pay a tax debt. It’s not just limited to your home—it can attach to your financial assets, personal property, and even your future assets. The IRS places this lien to ensure they can collect any outstanding taxes that are owed.
Unlike a tax levy—which involves seizure of property—a lien is simply a notice of the government’s right to collect a debt. It’s filed publicly, usually with the county recorder or clerk’s office, and becomes a matter of public record. The lien essentially ensures that the IRS has a legal right to claim your property if you don’t pay your tax debt.
When a lien is filed, it affects your ability to sell or refinance the property because it becomes a public record. This can create difficulties when attempting to sell your home, especially if there is a mortgage, because the buyer will see the lien and might be hesitant to proceed with the purchase.
For a comprehensive overview of how a federal tax lien works, visit the official IRS guide on understanding a federal tax lien.
Why Does the IRS File a Lien?
The IRS may file a lien for several reasons, typically after you have not paid your taxes or responded to IRS notices. Some common reasons for an IRS lien include:
- Unpaid back taxes – If you owe the IRS money and haven’t made payments as agreed, they may file a lien.
- Failure to respond to IRS notices – When the IRS issues notices demanding payment, failing to respond can lead to a lien.
- Accumulated penalties and interest – If your unpaid taxes have accumulated penalties and interest, the total owed can result in a lien being placed.
Once a lien is placed, it will affect your ability to transfer the title of your home, which is a critical issue when selling. If you do not resolve the lien, the sale may be delayed, and it could also reduce the value of the property in the eyes of potential buyers.
How an IRS Tax Lien Affects Your Home
A tax lien becomes part of the title history of your home. This creates problems when you try to sell because most buyers want clear title, free of any claims. Having a lien against your home essentially means that the IRS has first rights to the proceeds of your sale, unless the lien is cleared.
Here’s a breakdown of how a tax lien impacts the process of selling your property:
| Impact Area | Effect of Tax Lien |
|---|---|
| Title Transfer | Cannot transfer clear title |
| Mortgage Refinance | Typically not allowed |
| Buyer Interest | Lowers buyer confidence |
| Selling Timeline | May delay or complicate sale |
Without clearing the lien, the buyer would not be able to receive a clear title, which is essential for closing the sale. As a result, you must either pay off the lien or negotiate with the IRS to have it removed in order for the sale to proceed smoothly.
Title Transfer Issues
When an IRS lien is placed on your property, it acts as a claim on the property itself, even if you’re still living in it. The IRS places this lien in public records, which means any potential buyer conducting a title search will find out that the property has a lien against it. This means that the lien will have to be resolved before the sale can proceed.
Mortgage Refinance Issues
If you’re looking to refinance your mortgage, an existing IRS tax lien will prevent you from doing so. Mortgage lenders require clear title, and any existing liens, including tax liens, must be addressed before refinancing can occur.
Impact on Buyer Confidence
When potential buyers see a tax lien on the property, it can deter them from moving forward with the purchase. They may be concerned about the added complexity of dealing with the IRS or about the possibility of not being able to secure a clear title.
Timeline and Delays
Selling a home with a tax lien can take longer than a typical home sale. The lien will need to be resolved before the transaction can proceed, which can add significant time to the process. Even if you are working with a cash buyer, the title issue must still be addressed, which can cause further delays.
For more information on how property liens affect real estate transactions, check out this helpful article from Nolo on property liens.
Can You Sell a House With a Tax Lien in Elkins Park, PA?
Yes, you can—but there’s a catch. You’ll need to either pay off the lien, negotiate with the IRS, or find a buyer willing to purchase the property under certain conditions.
Here are a few scenarios to help clarify how this works:
Common Selling Scenarios
| Scenario | Can You Sell? | What You Need to Do |
|---|---|---|
| Full equity in the house | Yes | Use proceeds to pay off lien |
| Little to no equity | Maybe | Negotiate with IRS for release or compromise |
| Selling below lien amount | Harder | Consider partial lien release or subordination |
If you have full equity in your home, meaning your home is worth more than what you owe on your mortgage and taxes, you can simply use the proceeds from the sale to pay off the lien.
If you have little to no equity, the situation becomes more complex. You may need to negotiate with the IRS for a lien release or offer a compromise to settle for less than the total owed. In some cases, you may be able to negotiate a partial lien release or a lien subordination, allowing the IRS to move down the priority list for claims on the sale proceeds.
If you’re wondering how a lien specifically affects your refinancing or home sale, here’s a helpful article on mortgage liens and their impact on home sales from Bankrate.
Local Real Estate Challenges in Elkins Park
Elkins Park, PA, is a unique suburban market located just outside of Philadelphia. While the area has a desirable housing market, homeowners selling homes with IRS tax liens may face additional challenges. The following are some local hurdles to keep in mind:
- Title Companies Require Lien Resolution: Most title companies will refuse to issue title insurance for a property with an unresolved IRS lien. They will require proof that the lien is either paid off or subordinated before they’ll approve the sale.
- Real Estate Agents May Avoid Listing Liens: Many real estate agents prefer not to deal with properties that have outstanding liens, as they can be difficult to sell. This may limit your options for listing your home on the traditional market.
- Buyer Hesitation: Even if the sale proceeds are sufficient to cover the lien, buyers may be reluctant to purchase a home with a lien attached. Many buyers are looking for a smooth transaction and might not be willing to take on the added complication of negotiating with the IRS.
That said, cash buyers or real estate investors specializing in lien-affected properties may be more willing to take on the risk, so targeting these buyers could be an option if you’re in a hurry to sell.
Options for Selling a House With a Tax Lien
There are a few strategies you can pursue to sell your home despite having an IRS tax lien. Let’s go through each one:
1. Pay Off the Lien
If you have enough equity in your property, the simplest solution is to pay off the lien using the proceeds from your sale. This is the most straightforward approach and the one that will most easily allow you to transfer the title to the buyer.
Once the lien is satisfied, you can proceed with closing the sale as usual. However, this option might not be feasible for everyone, especially if the lien amount exceeds your home’s equity.
2. Request a Lien Release
If you’re unable to pay off the lien in full, the IRS may agree to release the lien on your home. This doesn’t eliminate the debt, but it removes the lien from your property, allowing you to proceed with the sale.
It’s essential to know that even though the lien is released, you are still liable for the underlying debt. In some cases, the IRS might agree to release the lien temporarily to allow for the sale of the property. However, you must negotiate the terms and ensure that the release is legally documented.
3. Discharge of Property
A discharge of property removes the lien from a specific asset, such as your home. The IRS will evaluate your financial situation and determine whether a discharge is appropriate. This option is often used when the home’s value is less than the amount owed to the IRS, or if you can prove that the lien is an undue hardship on you and your family.
4. Subordination
If you’re selling your home and still have an outstanding lien, subordination allows another lender (such as the buyer’s mortgage lender) to take priority over the IRS lien. This can make it easier to secure financing for the buyer, but it doesn’t eliminate the lien. It simply allows the buyer’s lender to be in a better position to take control of the property.
5. Offer in Compromise
In some cases, the IRS may be willing to settle for a lesser amount than the full debt you owe. This is known as an Offer in Compromise (OIC). If accepted, this option allows you to settle your tax debt for a fraction of what you owe. Once the IRS accepts the offer, the lien can be removed, allowing you to sell your home.
Who Can Help You Navigate the Process?
Selling a home with an IRS tax lien can be complex, and it’s important to work with professionals who specialize in tax liens and real estate transactions. Here are some of the key experts you’ll want to consult:
| Expert | How They Help |
|---|---|
| Real Estate Attorney | Review title issues, negotiate releases |
| Tax Professional (CPA) | Help you deal with IRS paperwork and payment options |
| Title Company | Manage lien resolution during escrow |
| Real Estate Investor | May purchase property as-is with lien (if profitable) |
These professionals can help guide you through the paperwork, negotiate with the IRS, and ensure that you’re taking the right steps toward resolving the lien.
Pros and Cons of Selling With a Tax Lien
Here’s a quick look at the pros and cons of selling a house with an IRS tax lien:
| Pros | Cons |
|---|---|
| Resolve debt burden quickly | Delays in closing |
| Sell your home in financial hardship | IRS paperwork and negotiation |
| Cash buyers may still be interested | Lower offers than market value |
Steps to Sell Your House With an IRS Lien
Step 1: Get a Copy of the Lien
Contact your local county clerk or request directly from the IRS. Review how much you owe.
Step 2: Estimate Your Home’s Value
Use online tools or hire an appraiser to determine market value. Subtract your mortgage and lien amount.
Step 3: Contact a Tax Professional or Real Estate Attorney
An experienced advisor can help you communicate with the IRS and explore legal options.
Step 4: Explore Selling Options
You can list with a traditional agent, approach an investor, or sell directly to a cash buyer familiar with lien processes.
Step 5: Coordinate With Title Company
During escrow, the lien will need to be addressed—either paid off or officially released.
The earlier you act, the better. Lien-related delays are common, so give yourself ample time.
Frequently Asked Questions (FAQs)
Q. Can I Sell My House With a Tax Lien in Elkins Park, PA?
Yes, you can sell your house even with an IRS tax lien in Elkins Park, PA, but you’ll need to resolve the lien before closing. Typically, the lien must be paid off using the proceeds from the sale, or you can negotiate a lien release with the IRS.
Q. How Long Does It Take to Get an IRS Lien Release in Elkins Park, PA?
The IRS typically takes 30 to 60 days to release a tax lien once all necessary paperwork and payments are completed. However, the timeline can vary depending on your specific case and whether you are negotiating an Offer in Compromise or a partial lien release.
Q. Can I Sell My House in Elkins Park, PA, if It Has an IRS Tax Lien?
Yes, you can sell your house in Elkins Park even if it has an IRS tax lien, but you will need to either pay off the lien or negotiate with the IRS to have it removed before the sale can go through.
Q. Will My Credit Score Improve After Paying Off an IRS Tax Lien in Elkins Park?
Once the IRS lien is satisfied and released, your credit score should improve. The lien is no longer reported to credit bureaus, which can positively impact your credit over time, depending on other factors in your credit report.
Q. Can I Sell My House with a Tax Lien in Elkins Park, PA, if I Owe More Than My Home’s Value?
Yes, but it’s more complicated. If your debt exceeds your home’s value, you might need to negotiate a settlement with the IRS, such as an Offer in Compromise, or find a buyer who is willing to deal with the lien.
Q. How Does an IRS Tax Lien Affect the Sale of My House in Elkins Park, PA?
An IRS tax lien can complicate the sale process since it must be cleared before closing. Buyers and title companies will require the lien to be resolved, either by paying off the lien or negotiating a release, to ensure that the title is free and clear for the transaction.
Final Thoughts
Selling a house with an IRS tax lien in Elkins Park, PA isn’t impossible—but it does require planning and persistence. Whether you pay the lien upfront, negotiate with the IRS, or sell to an experienced cash buyer, you have options.
By understanding your situation and taking action early, you can move past the burden of tax debt and on to your next chapter. If you’re ready to sell your house despite an IRS lien, Property Buyer Today is here to help. Our team of experts can guide you through the process, negotiate with the IRS, and ensure that you get the best outcome for your sale.
Contact Property Buyer Today today to learn how we can help you sell your house quickly and efficiently, even with an IRS tax lien. Don’t let a lien hold you back from a fresh start!