There is an IRS tax lien on my home. Can I put the house up for sale?

Technically, you are not supposed to sell your home without first paying off the federal tax lien that has been attached to it. This is how the government ensures that it gets its money before you gets yours. However, a clever lawyer can often help you sell your home anyway without getting in trouble.

Selling the Home and Paying the Lien

You are typically able to use the profit made from your home to pay off the federal tax lien, as this is usually the only way most homeowners can afford to pay the lien. However, if you can show that you did not make enough money off the sale of the house to pay the lien, the government will usually forgive the amount, discharging the lien. Of course, this requires that you not make a profit off your home, which is not an ideal situation for most people, but it will allow you to finally sell the house while satisfying the federal tax lien. If you are not interested in giving up any proceeds on the house, you can arrange to make payments to the IRS until the federal tax lien is paid off. This is how many people afford to get the lien off the house without having to pay lots of money upfront. This will allow you to finally sell the house in the future and keep all proceeds when you do.

The good news is that the IRS typically does not put homes with liens on them up for auction, though they are allowed to. The government would usually rather wait for you to pay off the federal tax lien, which means that the IRS may be willing to work with you so that you both get the money you need. Contacting a tax lawyer is often the best way to decide the ideal pathway for you.