If you’ve received a Notice of Federal Tax Lien and need to sell a home with IRS tax lien, the situation may seem hopeless — but it isn’t. A lien doesn’t automatically block a sale; it simply means the IRS has a legal claim to part of the proceeds.
With proper planning, you can sell or refinance even while a lien is attached — you just need IRS approval through a discharge or subordination request.
📘 Official Resource: Understanding a Federal Tax Lien — IRS
What Happens When You Have a Tax Lien on Your Home?
When the IRS files a Notice of Federal Tax Lien (NFTL), it becomes a public record that attaches to all real property you own — including your home. This lien gives the IRS priority over other creditors for the value of your equity, meaning they must be paid before or at closing.
Can You Sell Your Home With a Tax Lien?
Yes — but you’ll need to satisfy or release the lien before the buyer can take clear title.
Option 1: Pay the Lien in Full at Closing for Lien Release
This is the simplest and fastest way to clear title. At closing, the IRS is paid directly from the sale proceeds, and it issues a Certificate of Release of Federal Tax Lien within 30 days.
📘 Reference: IRS Lien Release Information
Option 2: Request a Certificate of Discharge (for Sell or Refinance a Specific Property)
If you can’t pay the entire tax debt, the IRS may let you sell your home if it receives some or all of the proceeds. If approved, the IRS issues a discharge that applies only to the property being sold, freeing it from the lien so the sale can close.
📘Program Reference: Publication 783 – Instructions on Discharge
Option 3: Request Lien Subordination (for Loan Approval or Refinance of Special Property)
If you’re not selling but need to refinance your home to pay the tax debt or other obligations, you can request lien subordination. Subordination means the IRS allows another creditor (such as a mortgage lender) to take priority over the lien — letting the loan proceed while preserving the IRS’s claim.
📘 Program Reference: Publication 784 — Subordination of Federal Tax Lien
Common Mistakes to Avoid
- Waiting until the closing date to contact the IRS
- Submitting incomplete documentation to the IRS
- Failing to notify title companies or lenders early
- Ignoring additional liens (state or county)
- Assuming bankruptcy automatically removes the IRS lien (it does not)
How a Tax Attorney Can Help?
A tax attorney can help you:
- Communicate directly with the IRS lien department
- Negotiate partial-payment releases when equity is low
- Coordinate with your real-estate and closing team
- Prevent future liens through payment plans or settlements
With representation via Form 2848 (Power of Attorney), the IRS communicates through your attorney, not you — protecting your sale timeline and peace of mind.
Need help with a similar issue? Contact our firm today for a consultation.
Selling a home with an IRS lien is absolutely possible — it just takes planning and cooperation with the IRS. By filing for a discharge, subordination, or paying through closing, you can move forward without losing the sale.
If you’re under contract and need IRS approval fast, contact Pelham PLLC. Our tax attorneys work directly with the IRS to secure lien releases and discharges so your closing stays on track.
FAQs
Can I sell my home if I still owe the IRS?
Yes — but you must pay the IRS from the sale or obtain a lien discharge.
Can I refinance instead of selling to deal with the lien?
Yes. A lien subordination lets a new lender move ahead of the IRS, making refinancing possible if it helps pay or manage your tax debt.
Can bankruptcy remove an IRS lien on my home?
No. Bankruptcy may discharge the tax debt, but an existing IRS lien survives and remains attached to your property until the lien is paid or formally released.
Do I need a tax attorney to sell my liened home?
Strongly recommended.
