Trying to sell your house in Utah under ideal conditions already brings with it plenty of stress and potential pitfalls. However, trying to sell a house with a tax lien attached can bring with it an entirely new set of challenges and issues that you need to plan for. That can be complicated even further if you didn’t actually realize there was a lien put on the property until you begin the sales process and search for the title of your house. Just like that, a simple situation is complicated and it can seem as though you are facing an uphill battle to sell your house in Utah.
That’s not necessarily the case, but you do need to make sure you have all the info handy when it comes to liens and how they can affect home selling in Utah. You’re certainly not out of options, whether you decide to sell your house on the housing market or if you want to sell your Utah house fast and sell it to a cash buyer like Cash Quick Buyers. Let’s take a closer look at whether or not you can sell your house with a tax lien in Utah and figure out the best ways to go about it.
What is a Tax Lien?
First, we need to make sure that you understand what a lien is. A lien is simply a legal claim that is made by a person, entity, or company against a property owned by a person or people who owe that person, entity, or company an unpaid debt. If the person who owes the debt is unable or refuses to pay, the debtor can go to court to get a lien attached to certain pieces of property, such as a house, in order to get compensated for that debt. You can usually find any lien in the local public records search, which also makes it easy for other creditors to find them. So if a lien or liens already exist against a house, lenders or creditors can use that to decide whether or not to offer loans to the owner.
A tax lien is a specific type of lien that, as you might imagine, involves unpaid taxes. When you live in Utah, you have to consider state taxes and federal taxes. Not paying either or both could land you with a tax lien on your property.
If you don’t pay state taxes, the Utah State Tax Commission (USTC) can put a tax lien on your property. Until you pay off the tax debt owed or come to an agreement with them about payments, that lien will stay on the property. If this happens, you’ll want to consult a tax attorney who understands how to deal with these kinds of situations so that you don’t get into deeper trouble as the tax commission is not an entity you want to tangle with too much.
In the same vein, if you don’t pay federal taxes to the Internal Revenue Service (IRS), they can put a tax lien on your property as well. Of all the liens you could have on your property this is probably the way you’d want to avoid the most as the IRS is historically difficult to deal with and a solution may require hiring lawyers or accountants to help get you out of the mess, especially if you want to remove the tax lien before you sell your Utah house.
How Do Tax Liens Impact Selling Your House in Utah?
The critical part to know is that a tax lien is usually attached to a house or some kind of real estate. So if you do decide to transfer ownership of the house, such as selling your Utah house, the lien is going to be part of the property. It will become the responsibility of the new owner, and it’s unlikely that a buyer on the housing market is going to want to take financial responsibility for debts that you accrued.
This is where selling your Utah house to a cash buyer can be a lot easier to do. Real estate investors like Cash Quick Buyers buy houses for cash and we don’t require any repairs or financial restitutions beforehand. We will buy your house with a tax lien attached. We won’t charge you any fees or commissions to do so and we can close on the sale ASAP if you want to. And then you get to have cash for your house and a fresh start without having to worry any longer.
Types of Tax Liens
While someone might say that they have a tax lien on their Utah property or home, there are different types of liens that you need to be aware of as they each have different issues and parameters.
Property Tax
Locally, you pay taxes to a municipality, such as a town, city, or county. These municipalities use those tax revenues to fund local services, such as police departments, libraries, and more. Specifically, they are getting revenue from property taxes, so if you don’t pay your property taxes, you could end up with a property tax lien against your house. This could happen only if you reach a certain amount owed or it could be simply because you didn’t pay specific municipal charges such as your water bill. You should be clear on your Utah municipality’s tax rules and regulations.
State Tax
As previously mentioned, Utah residents pay state taxes to cover statewide needs and if you don’t pay them accordingly, the Utah State Tax Commission can place a state tax lien on your home or real estate. While dealing with your local municipality has its own complications, those complications begin to grow when you’re dealing with a larger entity such as the entire state of Utah. So you’re going to want to see if you can work out a deal or hire legal experts if this happens.
Federal Tax
And as we also mentioned, if you fail to pay your federal taxes, the IRS can place a lien on your property, including your Utah house. This is one lien you seriously want to try to avoid at all costs as the IRS can be particularly tough to deal with, so you either should consider selling your house with a tax lien or consider paying for very good legal or accounting experts to help you.
How to Sell a House with Tax Lien in Utah
If you want to sell a house with a tax lien in Utah, you actually have a few options to consider, depending on your financial situation, how fast you need to sell, and other factors.
Sell a House For Cash
One of the quickest ways to sell a house with a lien is by working with a cash home buyer. Selling to an investor like Cash Quick Buyers means you can sell your house with a lien and not have to worry about getting rid of it first. We can make you a fair, no-obligation offer fast, often within a day, and then it’s up to you to accept. If you do, we don’t require any repairs or cleaning. We don’t work with middlemen like real estate agents, so there are no fees or commissions to consider. And we can close on your terms, whether you need to sell ASAP or want to sell on a specific timeline.
Resolve Your Debt
Another way to consider selling a house with a tax lien on it is to first work out a plan with the creditor who holds the lien. If you have the time and the financial means, you can sometimes work out an arrangement, such as a payment plan, to satisfy the debt. The IRS can also make what’s called an offer in compromise to help you eliminate your lien for less money, which would save you money overall. You can also consider taking some financial steps of your own, such as declaring bankruptcy or taking out a personal loan, though there are credit and financial considerations in doing either that you need to consider.
Apply for Subordination
Another thing you can ask the IRS or USTC to consider is subordination on your tax lien. While this does not eliminate the debt, it does place it behind other owed debts on your mortgage. More often than not, a tax lien takes first priority when you sell a house. But if you can get a subordination, that places the lien back in line, which can make it slightly easier to sell your house on the market.
Conclusion
While liens can feel scary and overwhelming, especially when you’re considering selling your Utah house, they don’t mean that you can’t move forward with your life. Contact Cash Quick Buyers today to see how we can help you and provide you with the information you need to sell your Utah house with a tax lien on it today.