INCREASING TAX LIEN?
There are times when homeowners fail to pay their taxes on time due to different circumstances. Some cannot provide the amount needed to stay out of tax debt, while others think that it is not a serious cause for concern.
This is where the problem usually starts. When homeowners feel that they are financially secure, they usually assume that the tax liens they incur when they do not pay on time will not put a dent on their resources – that is, until they realize that they bit off more than they could chew.
How can tax liens affect you negatively?
Not paying your taxes leads to a tax lien. To put it simply, a tax lien is a serious derogatory mark on your credit report that can cause long term problems for your finances. The mark stays on credit reports for seven years or more, depending on the severity of the tax lien.
Once a homeowner accrues a tax lien that they cannot afford to pay, the IRS will lay claim on the person’s assets based on their inability to pay taxes on time. When this happens, the government can seize the person’s assets and prevent them from turning a profit from their existing properties.
What happens when your house gets a tax lien?
According to the IRS, you cannot sell or refinance your home without paying your debts. Unfortunately, this makes it harder for people to pay their tax debts to remove the tax lien. Luckily, there are many ways for homeowners to solve their issues with their tax lien.
Before doing anything else, you have to develop a plan on how you can pay your tax debt. Here are some ideas:
1. If you cannot pay the full amount of your tax debt, you can still pay as much as you can to avoid penalties and interest.
The IRS offers short-term solutions like EXTENDING YOUR DEADLINE, providing an INSTALLMENT AGREEMENT, or offering a FAIR COMPROMISE. There is also the option of temporary delaying the collection of your taxes by reporting that your account is currently not collectible. Still, this cannot last long and you will still be forced to make your payments.
2. If you can’t pay in installments – especially if you are still paying for other expenses – the IRS can reduce your monthly payments to reflect your financial situation.
The agency will ask you to PROVIDE PROOF of your financial situation before they will agree to this arrangement.
3. SELL YOUR HOUSE AS QUICKLY AS POSSIBLE– preferably in cash.
Although the IRS does not allow you to sell your house without paying your debt, they have provisions that allow you to do it under their terms. Your debt can automatically be paid as long as you have equity on your property. The proceeds of the sale will go towards the payment of your debt, while the rest of the sale will go to you. If the property costs less than your tax lien, you will have to request the IRS to allow you to complete the sale so that you can still pay for a portion of your tax debt.
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Why should you sell your house?
As much as you would like to keep your home, it is technically the best option if you have incurred a sizable tax lien. The good thing about selling your home is that you will have a better chance of getting a new one with a better payment plan, as long as you are able to pay your tax debt in full.
There are other avenues that you could look into, like getting a second job, selling some of your personal effects, but selling a house is more lucrative in the long run. Not only can you pay your tax debts and start the process of cleaning up your credit line, you will also have a chance to start fresh.
Even if your tax lien exceeds the value of your house, the IRS can discharge the lien in favor of you making the sale. You can continue to pay off your debt without worrying about losing your home for nothing and you get to keep most of the cash from the sale. You can invest in a rental, start a new business, or find a cheaper alternative to your current home. Just remember to pay your taxes after you get your second chance.
If you’re in a bind and need a quick solution to your tax issues, Kahuna Buys Houses can offer you a chance to sell your house fast. We pay for all houses in cash, which means that you won’t have to worry about extending your tax liens. There are no other obligations after you accept our offer.
For more information, please visit us at www.kahunabuyshouses.com!