What a Tax Lien Actually Means
A tax lien is a legal claim placed against your property by a government authority — the IRS, your state, or your local municipality — to secure an unpaid tax debt. The lien attaches to the property itself, not just to you personally.
The Three Main Types of Tax Liens
Federal Tax Liens (IRS)
An IRS lien is filed when a taxpayer owes unpaid federal income taxes and the IRS has assessed the amount and the taxpayer has not paid.
Property Tax Liens
Filed by county or municipal authorities when property taxes go unpaid. These are the highest-priority liens in most states — senior to mortgages and virtually everything else.
State Income or Business Tax Liens
Similar to federal tax liens, these are filed when state income or business taxes go unpaid.
Can You Sell a Home With a Tax Lien?
Yes. But the lien must be satisfied — paid in full — at or before closing. If you have equity above the lien amount, the lien is paid from the sale proceeds at closing. You receive the remaining equity, and the transaction closes cleanly.
Why Traditional Buyers Cannot Help You
Mortgage lenders will not fund a purchase on a property with an unresolved lien. This means virtually all retail buyers using conventional, FHA, or VA loans are completely off the table.
How Cash Buyers Handle Lien Situations
Cash buyers work through lien situations routinely. They are not dependent on lenders. The title company orders a lien search, requests payoff statements, and every lien is cleared at closing from the purchase proceeds.
The Danger of Doing Nothing
Tax liens grow. The IRS charges interest compounding daily. Property tax liens often carry rates of 12–18% per year in some states. A lien that is $25,000 today may be $35,000 in two years.
Steps to Take Today
- Order a preliminary title report — identify all liens on the property
- Request a payoff statement — know the exact amount owed
- Request a cash offer — disclose the lien situation upfront
- Consult a tax professional — particularly if you have IRS liens