Can I sell or refinance my house and/or assets with an IRS tax lien filed against it? YESSS!!!!!
First, a tax lien is a lien against the taxpayers physical and financial assets. It is like a blanket, it covers everything, not just one thing. It is not meant to prevent the sale/refinancing of assets. It is made to protect the interests of the government.
So, in many cases the IRS will subordinate its lien, meaning it will let another creditor, in most cases a bank, take a higher priority than the government, if it is in the best interest of the government. For example, you would refinance your house and take out equity to pay the IRS or you want to sell your house and any cash going to the seller would go to the IRS.
If you have under $25,000 in tax debt, including penalties and interests and have made at least 3 direct debit payments, you may also request that the IRS withdraw the lien. This makes refinancing and/or selling your assets much easier. But, if a new tax debt is incurred, a new lien will appear so it is not uncommon that some taxpayers will have multiple tax liens filed against them. Once the tax debt has been paid the tax liens are self-releasing, meaning they will automatically release and nothing further needs to be done.
In some cases, but depending on the bank, if you have a payment agreement in place with the IRS, the bank may not require a subordination of the lien and you may be able to refinance and/or sell the house/asset. Once again, this is all depending on the individual bank.
So, just because you have a tax lien against you, it doesn’t mean you can’t refinance and/or sell your house. It just depends on the circumstances.
Also, in October, I will be giving a short seminar titled “I owe the IRS, now what?” at Assabet Valley Technical High School in Marlborough, MA. Sign up has already started.
Also, look for my Face Book post with a downloadable PDF on “21 Ways to Get Help for Your IRS Tax Problem and Get Your IRS Debt Resolved, Reduced, or Forgiven.”
Ancient taxes from around the world
- During the Middle Ages, European governments placed a tax on soap. It remained in effect for a very long time. Oliver Cromwell placed a tax on Royalists, who were his political opponents, taking one tenth of their property. He then used that money to fund his activities that were aimed against the Royalists. Great Britain didn’t release the tax on soap until 1835
- In 1885, Canada created a Chinese Head Tax under the Chinese immigration Act, which taxed the entry of Chinese immigrants into Canada. It was meant to discourage Chinese people from entering Canada after the completion of the Canadian Pacific Railway. The tax lasted until 1923 when a law was passed banning Chinese people from entering Canada altogether with a few exceptions. In 1947, the immigration act was repealed.