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Video: What Is a Federal Tax Lien on a Home?

Updated for Tax Year 2019


OVERVIEW

The IRS can respond to delinquent taxes by putting a federal tax lien on your home, but you can avoid this extreme measure through proper communication and cooperation with the authorities. Learn how to keep your home in this video on tax basics.


Video transcript:

Hello, I'm Sara from TurboTax with important news on how Federal Tax liens work.

After working so hard to buy your home, the last thing you want is an IRS tax lien on it for delinquent taxes. Knowing a little bit of the process however, may help you avoid it.

Attaining a Federal Tax lien on your home, is usually a last resort for the IRS. But it doesn't need to ever go this far. The most important thing you can do to avoid this, is to cooperate with the IRS by keeping the lines of communication open. Otherwise, you leave the IRS no choice, but to take more severe action.

When the IRS obtains a lien on a tax payer's home, it remains effective for up to ten years. But even when it expires, it's likely to be renewed. In addition to ruining your credit, it is nearly impossible to find a buyer since a lien stays on the house until all taxes are paid.

There are limits, however. If you decide the best thing is to sell your home and pay off your tax debt. The IRS may work with you, so that you can sell the home. But rest assured, the IRS gets paid before anyone else.

Once a lien is place, it's difficult to get it taken off, unless you have proof the IRS made some error in obtaining it. So, pay your taxes and if you can't, make sure to work out a payment plan with the IRS. This helps you avoid the pain of an IRS lien. For more tax tips and guidance, visit TurboTax.com.

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