Tax liens are like a giant stop sign for property owners who are ready to sell. Especially for those faced with a tax lien placed on their property so high that selling their home is the only option available to repay the debt, which will be due at closing. A word to the wise, working with the government, be it local, state, or the IRS, towards settling a tax lien is a long process, so don’t wait until your house sells to contact the tax authorities and begin to work with them towards a solution.
Take action immediately to tackle your tax lien head-on. The more swiftly you deal with the problem, the more money you will save because high penalties and interest will increase the debt day by day, depleting any equity remaining in the property.
While you should always consult a professional tax adviser to discuss your specific circumstances, our experts have gathered the following information about how to sell a New Jersey house when you owe back taxes.
Many local taxing authorities can create a repayment plan or forgive back taxes for a New Jersey house, should the owner prove significant hardship or meet specific income guidelines.
Satisfy the Delinquent Tax
Paying off the lien before selling your New Jersey house when you owe back taxes is the easiest way to avoid any problems with the closing. A tax attorney may also be able to negotiate a settlement on your behalf to satisfy your debt. Protect yourself by verifying the recording of the lien release.
If you’ve settled the debt or the lien for back taxes is due to an error in identity, it is well worth hiring an attorney with experience in disputing tax liens to help you sell a New Jersey house.
Certificate of Discharge
You can approach the IRS for a certificate of discharge, which will remove the lien from your property. However, while you can still sell a New Jersey house when you owe back taxes, you will still owe the debt.
Pay at Closing
It is common for the debt to be settled at the closing on a New Jersey house when you owe back taxes. After you’ve verified the exact amount with the title agent handling the closing, ensure you have requested your certificate of release. A state representative will attend the closing, collect the tax debt from the title company’s closing agent, and issue a loan release. will
Though this is an infrequent occurrence, to say the least, lower tax bills owed to the IRS may be allowed to expire after the ten-year statute of limitations on tax debts, meaning you may not have to sell a New Jersey house when you owe back taxes. Hoping that your debt will expire isn’t adviseable as your plan of action.
If you are unable to pay the debt, claiming bankruptcy may just be your best option to sell a New Jersey house when you owe back taxes. If you want to maintain ownership, however, you will still owe the debt.
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