What To Know Before You Buy A Home With A Federal Tax Lien On It

If you buy a home with a federal tax lien on it, it is important to note that the home is not actually yours until that lien is satisfied.  The IRS has the right to recover taxes taking the original taxpayer’s assets that were attached by a lien, including their home.  When you buy a home with a federal tax lien on it, the IRS has can take that home from you.

Many people looking for a good deal buy a home that has been foreclosed on.  They may buy a home with a federal tax lien on it without even knowing it.  They might have purchased a home from the county, thinking that only the county tax lien needs to be addressed.  What they don’t know is that a federal tax lien still needs to be paid once the county lien is satisfied.  They might buy a home with a federal tax lien on it while under the impression that the county taxes are all that is due.

It is possible to buy a home with a federal tax lien on it and still come out ahead.  Some tax liens are small.  Just be sure not to include the amount of the lien in your bid.  When you buy a home with a federal tax lien on it, the price you pay for the home does not pay the lien amount. 

Make sure you pay the lien within days of the purchase of the home.  The IRS has 120 days after you buy a home with a federal tax lien on it to take that home from you if the debt remains unpaid.  If you buy a home with a federal tax lien on it that is in need of repair or that you intend to redecorate the IRS can take the home after that fact.  You cannot recover that money spent on the home because when you buy a home with a federal tax lien on it and the IRS later takes the home, they only have to repay you for the price you paid, not any additional money you have spent on the home.

A title search before you buy a home with a federal tax lien on it will disclose other liens and their amounts that you may have to pay.  Know the laws before you buy a home with a federal tax lien on it because sometimes a federal lien will override other liens and you may not be responsible for paying them.  It may be a good investment to buy a home with a federal tax lien on it if you do your homework ahead of time.
 

Privacy Statement >> Terms And Conditions