Can You Sell A House In With Back Property Taxes?
Do you have a house that you want to sell but are worried because there are back taxes owed on the property? Have you recently inherited property with a tax lien on it, and you aren’t sure what to do with it? Are you wondering can you sell a house in tax foreclosure?
Many people, just like you, constantly scour the web to find out if they can sell property with a current tax lien. In short, the answer is yes, but there are a few hoops you may need to jump through if you want to sell your home the traditional way.
Fortunately, there is another way to sell your home without having too much hassle. Continue reading on below to find out how you can sell your home with ease and who you can reach out to for more information!
What Is A Property Tax Lien Foreclosure?
A property tax lien is placed on a piece of real estate when the homeowner does not pay their property taxes. Unlike other types of liens, the property tax lien is only attached to the property behind on property tax payments, not any other property you own. With traditional foreclosures, the house itself is sold to pay off the property’s debt, but tax lien foreclosure is slightly different.
In Bexar county and Texas overall, when you go to foreclosure for back taxes, unlike in other states, your actual property is up for auction. Should your property be sold, your house now belongs to the bidder at the auction. You will be forced do move out.
How Are Property Tax Liens Auctioned?
Tax liens are foreclosed on and sold at auction in Bexar county and at each county across Texas. The autcion is typically held on the steps of the county courthouse on the first Tuesday of each month.
The county may not sell the property if auction bids are too low. If someone does meet the minimum bid, they become the new owner. The previous owner will then have a redemption period during which they could buy back the property.
How to Redeem the Property
A property can be redeemed in Texas within six months if it is not a homestead property. There is a fee to redeem the property and regain ownership. The fee is 25% of what the property was auctioned for. So if the property was auctioned for $100,000, it would take $125,000 to redeem the property.
If the property is a homestead, there is a 2-year redemption period. However, if the property is redeemed after 12 months, the fee to redeem increases to 50%. Using the same example as above, the redemption amount would be $150,000 to regain ownership in months 12-24.
When The House is Considered Redeemed
Once a property has been sold at auction, a property can only be considered redeemed after the auction sold price plus fees have been paid to the foreclosing county in certified funds. At that time, the ownership will revert back to the previous owner.
Property Tax Liens Take Priority Over Other Liens
Tax lien sales present a specific risk for lienholders, homeowners, and mortgage lenders. This is because the property tax lien takes priority over other liens.
This means that property taxes must be paid first, which means that other lienholders may not receive payment at all. Once the lien payment is taken care of, there is typically nothing left for the homeowner.
Can You Sell A House in Foreclsoure For Back Taxes?
In short, yes, you can sell your house even if it is in tax foreclosure. Depending on your unique situation, you may be able to list the house with a realtor. However, if you want to avoid high commissions, you may choose to work with a direct cash buyer.
How Tax Liens Affect Your Home Sale
You have the opportunity to sell your house traditionally on the housing market as there is nothing forbidding you from doing so. Even if the government has filed a tax lien against your home, you can still sell it. Putting your house on the open market is one way to take back the taxes you owe.
Closing on the Home Sale
Depending on how much you sell your house for, you may be able to recoup enough money to pay back what you owe. If you do sell your home for a significant amount of money to pay off what you owe on your mortgage and what you owe in taxes, you may be able to remove the lien from your home. This will result in a clear final home sale.
On the other hand, if you do not have enough equity in the home, you may not be able to sell your home for an amount high enough to cover what you owe in taxes and what you owe in unpaid taxes. If this happens, you will either have to pay off the taxes you owe before selling the house, or you will have to reach out to the government body you owe money to so they can discharge your tax debt.
How To Sell A House With Back Taxes Owed
As mentioned earlier, you may have the opportunity to sell your home before you face losing the property at the tax foreclosure auction. Understanding how to handle your back taxes when selling your house is an important step in getting out of this scary situation.
Figure Out Your Debt
The first step in traditionally selling your home with a tax lien is to figure out how much you owe. You also need to figure out if you have a redemption period or not. If you inherited the property with back taxes this can be a time consuming process.
Once you know how much you owe, you will want to create a strategy to figure out how much to sell your home for. You should also find out how much equity you have in your home at this stage.
Declutter, Clean, and Stage
Have you ever looked at a home listing online, and you absolutely hated a home because the photos weren’t great? That is the last thing you want to happen when potential buyers look at your home online. Hiring a professional photographer specializing in real estate can help put your house in the best light.
List Your Home
With your house cleaned and staged, it’s time to list your home! You can either list the house yourself, or your agent can do it on your behalf. Your agent should also be able to help with your marketing to ensure that you get the right buyers.
If the house needs repairs, a traditional listing might not be the best approach. Keep reading to get info on how to sell your house to a local San Antonio based direct buyer.
Review and Accept Offers
As the offers roll in, be sure to review them and answer them as soon as you can. Most homebuyers expect a response within 48 hours after they put in an offer. If you see an offer you like, you should go ahead and start the buying process, especially if your buyer is using a home loan. The process of appraising and inspecting your home can take time, especially if your buyer has an FHA or conventional loan.
Other Ways to Pay Your Tax Debt
If you cannot pay your tax debt, the best thing to do is reach out to your local taxing authority and try to resolve the debt in other ways. Some governing bodies may be willing to work with you and set up a payment plan.
If they agree, you may be able to keep your home contingent upon you making your agreed monthly payments on time. Depending on how much you owe, paying off your tax bill can take time.
Offer in Compromise
If your tax lien is filed by your state or the Internal Revenue System, an offer in compromise may help you eliminate your lien for less money. If either of the two governing bodies agrees with you and they approve your request, you may be able to pay off your lien for less than you owe.
For example, let’s say that you owe $25,000 in federal income taxes and you present an offer in compromise of $10,000. The IRS may forgive your unpaid federal income taxes after paying them that $10,000.
Keep in mind that qualifying for an offer in compromise is not always guaranteed. The IRS or your local taxing authorities will need to look at your current income, ability to pay, assets, and expenses before they make a final decision on your request.
Use a Personal Loan
You may be able to secure a personal loan and use the proceeds from that account to pay off your tax debts. Keep in mind that some lenders may not be willing to fund your loan if you have any unpaid taxes. If you receive approval for a personal loan, be sure to make timely payments, especially if you have to put up collateral to obtain your personal loan.
Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy, you will work with a bankruptcy lawyer and judge to create a repayment plan to pay off your debts. Most chapter 13 bankruptcies allow you to pay less than what you owe. When you enter into a repayment plan, it helps keep your state or local governments from seizing your properties.
It will also keep the IRS at bay if you owe them money as well. Once you fulfill your end of paying your payments on time, the judge will discharge your debts.
Be sure to make your payments on time every time. You risk losing your house and any other properties listed in your Chapter 13 bankruptcy paperwork if you do not.
Apply for Subordination
If you have a federal tax lien, you can reach out to the IRS to subordinate your lien. This won’t remove the lien; instead, it will place the lien behind other creditors on your home loan.
As you now know, tax liens usually take priority before any other liens, but you may be able to move its priority level. Subordinating your tax lien could make it easier to sell your home and close on the sale. If you are unsure if you are eligible for subordination, you can check out IRS publication 784.
Obtain a Certificate of Discharge
If you wish to remove the federal lien from your home altogether, you can apply for a Certificate of Discharge from the IRS. The IRS doesn’t always accept a request for a discharge, but if you have other property worth twice as much as your tax liability, you may receive an approval. For example, if your tax lien is $30,000, you will need at least twice your tax liability or about $60,000 worth of assets subject to the federal tax lien.
Selling Your Home For Cash With Back Taxes
You have several different options to sell your home, even with a tax lien. Of course, selling your home traditionally can take time, and there is no guarantee that you will clear enough to cover your debts.
You also might not have enough equity to help you move into another home. There is no need to worry because you still have one more viable option. You can sell your home as it is for cash.
Cash Sale Process
Several different companies, such as Capstone Homebuyers, offer you cash for your home regardless of its condition and if you owe any back taxes. Other companies who buy your house for cash may deduct real estate commission fees and additional added costs from your net proceeds, leaving you with less than you initially talked about, but not with Capstone Homebuyers. Let’s go over the process of selling your home.
Step One: Request an Offer
With most companies that wish to purchase your home for cash, you will need first to request a quote. All you need to do is input the information about your property and input your contact information. They will reach out to you to schedule a time to see the house.
Step Two: Review the Property
Once they come out to look at your home, they will then present you with a free, no-obligation cash offer. If you have any questions about the process or about anything at all, they will be there to answer them.
Step Three: Review Your Offer
With your offer in hand, you can take the time you need to make your final decision. When working with Capstone Homebuyers, they don’t include any fees in their valuation.
This means there are no repair fees, real estate agent fees, or appraisal fees you need to worry about. Even if the house is inherited, we still cover the closing cost fees. The offer they provide to you is the money you will receive, regardless of whether you owe any taxes.
Step Four: Accept Your Offer
After reviewing and accepting your offer, you get to choose your closing day. With your closing day set, Capstone Homebuyers will close with you at a local title company, and you will receive your cash on hand. They will take possession of the house, and you won’t have to worry about the repairs or listing the home for sale.
Is Capstone Homebuyers Reputable?
Many people assume that people who buy houses for cash are scammers, and they don’t have the financial backing to pay for what they quoted you. That is not the case with Capstone Homebuyers.
This business has been in business since 2015, and they have an A+ rating with the Better Business Bureau. If you are still unsure, you can always check out their reviews to see what customers did or did not like about working with them.
What Our Clients Say
“I appreciate all you did when I needed to sell my home. You went above and beyond in every way.
I couldn’t believe how transparent you made the buying process.
“Mr. Hager took away all of the hassles of selling my mother’s house. The house had been in a disputed probate situation for several months.
Mr. Hager exercised patience and used his knowledge to help me through the process."
"Very professional and welcoming! I appreciate how fast and responsive the company is. I would highly recommend it.
Couldn't have asked for a better experience.
Thank you so much Capstone Homebuyers."
"Colby was a man of his word. I had a bad experience with other home buyers, and was about to give up on the whole process. Colby and Capstone gave me the best offer, and did everything they said they were going to do. I was able to start over without worries.
"We loved this business from the start. We turned out to be a special case but Colby never gave up and saw it thru to the end. We couldn't be more grateful.
We would recommend Capstone and Colby to everyone."
"Absolutely awesome! Gave me an offer and we closed the same month. I am beyond grateful for Capstone and Colby!!!
Thank you for your honesty, communication, and dedication! My family and I appreciate you!"
"Recommend. I did a lot of research and went with Colby at capstone because I needed to sell quickly and efficiently.
Great communication, and answered any questions I had.
Made me feel comfortable with the whole transaction. Would definitely recommend to friends and family."
Generating Your Offer Amount
Many people curious about selling their homes to a company that pays cash often wonder how these companies come up with their valuations. Many companies look at the home’s location, the condition of the house, and what repairs are needed.
They also look at similar houses recently sold in the area to generate a fair offer. Once they consider all of those factors, they will present you with an offer. They also will take care of the closing costs on your behalf.
Sell Your House for Cash!
Now that you know the answer to “can you sell a house in tax foreclosure?” it’s time to request your free no-obligation cash offer. There is no need for you to struggle or worry about catching up on your unpaid tax payments.
Instead, you can sell your home for cash and walk away worry-free. If you are ready to receive your free quote, contact us now. Our team is well-prepared to answer any questions or concerns about the process.