Dealing with debt and owing money is always difficult, especially when it gets to the point that you have a lien against your property for something as serious as unpaid taxes, it’s hard not to feel overwhelmed. But the good news is you do have options. Often homeowners forget that they own and live in their most valuable asset-their house- and that selling this asset might be the best option to clear the lien.
Whether you’re dealing with outstanding income taxes, unpaid child support, or property taxes to your local Gainesville treasurer, it’s time to settle things so that this tax lien doesn’t loom over you any longer or, worse, compound with more interest and penalties.
What Is a House in Lien?
A tax lien on a house is basically a debt claim against your biggest asset, your house. This means you won’t be able to sell your home and keep any equity from the sale until the tax lien is paid. The IRS follows these steps before placing a tax lien on your Gainesville home.
- If you owe taxes, the IRS will send you a bill. This is your first bill for taxes that are due. Based on your tax return, we will calculate how much you owe in taxes, plus any penalties and interest.
- If you don’t pay your first bill, the IRS will send you at least one more notice to try to collect. Remember, penalties and interest continue to accrue up until you’ve paid your total amount due.
- If you still do not pay even after receiving your final bill, the IRS will begin taking collection actions. Collection actions can range from applying your subsequent tax year refunds to tax due (until paid in full) or to seize your property and assets, even getting an unannounced visit from the Revenue Officer to your home or business.
There are three main types of tax liens people can get:
- State Tax Liens-Which are liens placed on a property for back taxes due to your Florida Department of Revenue.
- Property Tax Liens-Liens placed on your house for unpaid property taxes due to the county or city.
- Federal Tax Liens-These are liens placed on your home due to unpaid income taxes owed to the IRS.
In most situations, you’ll be dealing with the government to resolve the tax lien, however, sometimes, private entities become involved, such as with a property tax lien.
What are Real Estate Taxes in Florida?
Florida is one of the few states that doesn’t have a state income tax, which has made it popular to live and retire there. But like most states, Florida does have a property tax on all properties you own, and if you are selling a property or renting, you may be required to pay federal taxes on any profit made, also called capital gains taxes. Property taxes fund, libraries, medical services, public schools, infrastructure, and roads. The local property appraiser sets the assessed value to each home effective January 1st each year. Each Floridian must pay these property taxes according to state law. The only Florida properties exempt from paying property taxes are churches, schools, and government properties. Regardless of who owns a property, the tax rates stay the same.
Can You Sell a House in Tax Lien in Florida?
Yes, you can! If you find yourself in a position where you’re unable to settle your unpaid taxes outright, you might find that selling your house is the next best option. However, to sell a house with a tax lien in Florida, you can’t complete your home’s sale until your debt is resolved. So, in other words, you can’t close escrow on the home without resolving the lien. But in the meantime, you can start selling your house to use the proceeds from the sale to pay to remove the lien.
How to Sell a House with Tax Lien
Selling a house with a tax lien in Gainesville will be pretty similar to selling a property without one. But there are a few key elements that you’ll want to consider because you’re selling a house with a lien.
Decide How You’ll Sell
To sell a house on the open market, whether that be to sell a house with a tax lien or not, you’ll need to decide on a selling strategy. Typically people choose between these three options:
- Sell with a Real Estate Agent
- List For Sale by Owner (FSBO)
- Sell to an iBuyer
Each has its pros and cons, which we’ll look at to help you in your decision.
Sell with a Real Estate Agent
Listing with an agent is usually the easiest way to sell a house on the market, but it does have its drawbacks. Let’s take a look at the pros and cons for you to decide.
- Ease of Sale- As long as you hire a full-service agent, they’ll help with a listing price, be in charge of marketing, open houses, negotiate on your behalf, and all paperwork involved.
- Knowledge of the Market- A top or seasoned Gainesville agent will have knowledge about the real estate market and trends. They can also lend some advice if your house isn’t selling quickly.
- High Realtor Commission- Realtors don’t work for free. To sell your house with agents involved, you’re looking at paying a 5.50%-6% commission.
- No Guarantees- Listing with an agent doesn’t guarantee a fast home sale. So if you need to sell your house quickly, maybe to avoid foreclosure or filing bankruptcy, there is no guarantee that your agent will sell in the timeframe you need. They typically even have you sign a listing agreement giving them 3-6 months to sell your home.
Listing For Sale By Owner (FSBO)
Selling by owner is a good option if you’re looking to save some money on the sale of your home. But those savings may only translate to a 2.5% commission. Because if your buyer uses a realtor, there will still be commissions to cover. Which is still a savings compared to listing with an agent, except you’ll be doing all the work. Let’s take a look at the pros and cons, though, for you to decide.
- Control of the Sale- Having control of your home sale is nice, you decide how much to list for, you choose when showings should be scheduled, you decide how you’d like to market. Some people like all that control, and you may too.
- Cheaper Commissions- As mentioned above, you will be able to save on listing agent fees which translate to 2.5% of the sale price. Being able to save some money is a reason to consider selling by the owner.
- A lot of Work- Selling a house by yourself isn’t easy and will involve a lot of work that you may not be familiar with. It will be up to you to figure out the correct listing price, market your listing, negotiate, and handle all the paperwork involved.
- No Guarantees- Selling FSBO has no guarantees of a fast home sale.
→ Should you sell your house by owner or with a realtor? Click here to find out.
Selling to an iBuyer
Not sure what an iBuyer is? iBuyer’s are large companies that buy and sell houses online. Over the years, they have become more popular for their ease of sale, however, you’ll want to decide for yourself if this option is right for you.
- Ease of Sale- You can easily sell your house online to an iBuyer. You just put in your home’s information and see what they can offer you.
- More Certainty- iBuyer’s usually let you decide when you’d like to close and officially sell your house.
- Expensive Service Fees- Selling to an iBuyer isn’t cheap, they charge service fees that can cost between 5-14% of the sale price of your home- ultimately, costing more than listing with a realtor.
- Buying Criteria- The company has criteria of the houses they are looking to buy, if your place doesn’t meet their standards, you may not receive an offer. To give you an idea, they are usually looking for houses in good condition.
Get Your House Ready to Sell
Once you figure out which selling strategy is for you, you’ll need to start getting your house ready. You’ll need to see what repairs need to be made, what cleaning and decluttering needs to be done, and how you can add curb appeal to your house. All of these things can be time-consuming and expensive, so you’ll want to figure out what you have time to do and if it fits your budget.
Be Truthful about your Home Sale
Since you’re selling a house with a tax lien in FL, you need to be forthcoming about this to prospective buyers. Whether they’re simply embarrassed about their debt or in denial, some homeowners think they can keep the tax lien quiet until after the property is sold. You to may feel reluctant to alert buyers about the lien, but honesty is the best policy in this situation. It is never a good idea to mislead a buyer or an agent, and a quick title search will show existing tax liens on your house anyway. The bottom line: you can’t complete your home sale without the debt being resolved, so there’s no benefit to keeping it hidden.
Find the Right Buyer
To be completely honest, some home buyers are reluctant to buy a house with a lien, so your pool of potential buyers may be small. However, there are buyers out there that don’t see this as an issue and will work with you.
Sell Your Gainesville Home Today is a cash home buyer who is very familiar with home liens and buying houses.
Selling your house to this “We Buy Homes Gainesville” company would be a great option because they can make you a cash offer within 24-hours and close within 7-days or longer if needed. Also, they don’t require repairs or renovations, so you can sell your house as-is. And since they work directly with you, agents don’t need to be involved which means no real estate commissions.
Selling your home to a cash home buyer like Sell Your Gainesville Home Today would be a great way to sell your house quickly. And saving on repair costs and real estate commissions is hard not to pass up.
Owing taxes and having a lien on your home is definitely an unease situation. But as you’ve learned, you can sell your house to resolve this and move on. If selling your house to a cash home buyer sounds like the selling strategy you’d like to use, feel free to contact Sell Your Gainesville Home Today to learn more about how it works.