A tax lien can make selling your home more difficult.
If you don’t pay your local, state or federal taxes, a government taxing authority can file a lien and then sell your home to get paid the money you owe. Even if the taxing authority doesn’t force a sale, selling your property to a buyer on your own requires conveying a clear title. Typically, a buyer won’t purchase a property if there’s any type of lien clouding the title, notes the legal website Nolo.
Delinquent Property Taxes
Negotiating with Buyers
If you fall behind on your property taxes, you can sell your house before the county places a lien against it and forecloses. When you find a buyer, the taxes must be current at closing. If they aren't, you can’t transfer the title. Since you can pay the delinquent taxes you owe from the proceeds of the sale before the close of escrow, this allows you to pass clear title. You
can also negotiate with the buyers for them to pay any back taxes. Although you can make it a condition of sale, you must clearly stipulate in the real estate purchase contract who is responsible for paying the delinquent taxes.
Past-Due State Taxes
If you owe past-due state taxes and your state’s Department of Revenue or Treasury files a lien on your real and personal property, you won’t be able to sell or transfer ownership of your house until you pay your taxes. A state tax lien gives the state a legal right to your property, including the right to sell your house and use the proceeds to satisfy your tax debt, points out Legal Aid of Arkansas. You may be able to make payment arrangements to pay off the delinquent taxes, but the state may still file a lien against your property. Once you pay the debt in full, you can ask the state to withdraw the tax lien.
Not Paying Federal Income Taxes