The Inside Scoop on Tax Liens
Understanding Tax Liens
Do you know what a tax lien is? A tax lien is a legal claim against a person’s property. Tax authorities can put a lien on a property if a homeowner or business owner cannot pay their taxes. For instance, if you are unable to pay your property or income taxes, the IRS may place a lien on your house or other assets. This lien is like a public notice stating the government has legal rights to seize your property or take other collection activity against you. Want to know more about the topic? See more, an external resource we’ve prepared to complement your reading.
What Happens When You Have a Tax Lien?
The disgruntled feeling of having a tax lien is quite overwhelming. The lien ruins the credit rating and may impede an individual or business entity from borrowing money or securing a loan. In some cases, the credit rating can significantly deteriorate impacting ability to obtain employment.
Strategies for Removing a Tax Lien
Fortunately, there are ways to have a tax lien removed. If a lien is filed in error, the person or business entity can file an appeal or dispute the lien. Also, the tax liability can be paid in full or through compromise or participation in an installment agreement. An installment agreement is an arrangement between the person and the IRS to pay off the debt over time. This strategy works if the person or business entity is unable or unwilling to pay in full.
Another strategy for removing a tax lien is by requesting a lien withdrawal or releasing the lien. This does not remove the liability owed but can help improve the credit score. The IRS can withdraw the lien or release the liability if the taxpayer owes less than $25,000 and agrees to an installment payment agreement.
Impact on Real estate Property
When a homeowner cannot pay their property taxes, the local or municipal government may place a tax lien on the property. If the homeowner does not pay the lien within a specified period, the government may put the property up for sale through an auction.
Meanwhile, if you are looking to purchase real estate property, you should look up the history of the property in the county records to determine if there is any unresolved lien against the property. If there is, have the seller sign a written agreement to remove the lien before you sign a sale contract. If you can’t remove the lien before the closing, the lien transfers with the property.
Things to Remember about Tax Liens
When you find out that you have a tax lien against your property, try not to panic. Take responsibility and find a way to pay off the liens on time. If you cannot pay the whole amount, negotiate a payment plan to at least show willingness to pay the liability. Do not forget that the lien can negatively impact your credit score, and you will have a harder time when applying for a mortgage or getting a loan in the future.
Also, when bidding on property, remember to look up any unresolved liens against the property. You will not want to end up with someone else’s debt when you buy your dream home. Discover additional information about the subject in this external source we’ve carefully selected for you. https://strategicpassiveinvestments.com, obtain worthwhile and supplementary details to enhance your comprehension of the topic.
Conclusion
Tax liens can be intimidating, but they do not have to ruin your life. Seek help from tax professionals, work out payment plans, and ensure that you make on-time payments. Remember the impact that tax liens can have on real estate property transactions and always ensure you research before purchasing any property.
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