Selling a house with tax liens on is hard, especially when the amount you owe is high and you don’t have sufficient funds in hand to clear it. It may feel like a dead-end, but there are ways to sell it. Whether you’re dealing with unpaid property taxes to your local county treasurer or outstanding income taxes, the best option is to tackle it head-on. Postponing liens adds to your mental stress and increases your financial burden with further penalties and interest.
Use this article to help you figure out your options and consider the best way forward when selling a SoCal home with tax liens.
What Is a Tax Lien on Your Home?
A tax lien is a type of debt against your house, and this means you cannot sell the house until you clear the pending payments. Some of the main types of tax liens include:
- State tax liens: These are placed on your property for outstanding taxes due to your state’s DOR (Department of Revenue).
- Property tax liens: These are due to unpaid property taxes to your city or local county council.
- Federal tax liens: These are placed on your home due to any outstanding income taxes you owe to the IRS.
Though it’s impossible to sell a house with a tax lien on it, there are still workarounds. Here are the top ways to sell a house fast in Southern California with liens on it.
1. Pay the Outstanding Liens
If you owe a few hundred dollars, paying the outstanding taxes and penalties makes the most sense. If the amount is a large sum, it may not be possible to pay out of pocket.
2. Dispute Erroneous Liens
If the pending liens were filed in error when you settled all your taxes, dispute the liens. You can hire tax experts to help you navigate your way out of this situation. Tax attorneys can help you file an appeal with the IRS and resolve it if it has been filed by mistake.
3. Wait for the Lien to Expire
Technically, you can wait for the lien to expire, but it’s not recommended. Keep in mind that the IRS and other government departments do not allow liens to expire. By waiting, you’re gambling with the government, causing irreparable damage to your financial accounts. This option should only be taken when no other options are available.
4. Get and Present a Certificate of Discharge
You can request the IRS to issue a certificate of discharge. While this doesn’t resolve the pending liens, it allows you to sell the house and use its equity to pay off the lien. When closing the sale, you have to present the discharge certificate. The closing attorney transfers funds from the sale to the creditor to resolve the lien.
5. Sell Your House As-Is
Selling your house to cash home buyers in Southern California is one of the best and easiest ways to dispose of a property with pending liens. Cash buyers purchase your property in any condition, and you don’t even have to bother with repairs and renovations. You can use the sale proceeds to settle pending liens or get the buyer to handle it for you. If you’re going for the latter option, the buyer will reduce the sale price according to how much you owe.
Avoiding dealing with pending liens could put you in bigger financial troubles down the line. Use the options mentioned here to resolve pending liens and sell your house fast without any hassles.