Have a Tax Lien On Your Home, IRS Will Work With You
Wow.
If you are trying to sell your home but have a tax lien on it, today is your lucky day. The IRS announced that it will discharge or subordinate any tax lien on the property if you sell it or refinance it for less than the cost of the property.
* Subordination of Tax Lien. Homeowners seeking to refinance their mortgage can request the IRS to subordinate its tax lien. Details are in Publication 784, How to Prepare an Application for a Certificate of Subordination of a Federal Tax Lien. Requests for a Certificate of Subordination are sent to one of forty Collection Advisory Groups listed in Publication 4235, Collection Advisory Group Addresses.
* Discharge of Tax Lien. Homeowners seeking to sell their home for less than the amount of their mortgage can request the IRS to discharge its tax lien. The IRS also can issue a certificate of discharge in other circumstances if the taxpayer has sufficient equity in other assets, can substitute other assets, or is able to pay the IRS its equity in the property. Details are in Publication 783, Instructions on How to Apply for a Certificate of Discharge of a Federal Tax Lien. Requests for a Certificate of Discharge are sent to one of forty Collection Advisory Groups listed in Publication 4235, Collection Advisory Group Addresses. via TaxProf Blog
So let me get this straight. Now you can have a tax lien and be in foreclosure, but the banks can work with you?
The world has truly turned upside down.
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Comment by Mr Mogul on 17 December 2008:
Awesome. So, a homeowner who allows credit card debt to go to collections (90 days), negotiates minimum payments in court when the lien is applied, then sells for less than the property is worth is actually better off than – say, well, everyone else?
This is just crazy enough to be the new reality. How about a reality based television show on this topic? I’d watch it every week…..
Comment by Sarah on 22 April 2009:
I’ve bought tax lien certificates for a long time and it’s really safe when you know how the strategies work, just like John said above. There are pitfalls in this strategy just like any other but they’re easily avoided when you research the properties in depth. I love the strategies so much that I started a site talking about it. NoRiskInvestor.comI hope you’ve had an opportunity to pursue these strategies. Wish you the best