Can I Sell My House with an IRS Lien? Yes, Here Is How

Yes, you can sell your house even with an IRS lien attached to it. In most cases the lien is paid off directly from your sale proceeds at closing, and the buyer receives clear title.

What an IRS Tax Lien Actually Is

When you owe the IRS back taxes and do not pay, the government files a Notice of Federal Tax Lien. That notice is a public record that attaches to all of your property - real estate, financial accounts, and future assets. It does not mean the IRS is about to seize your home tomorrow, but it does mean the debt follows the property and must be addressed before a buyer can receive clear title.

A lien is a legal claim. A levy is the actual seizure of property to satisfy a debt. Most Sacramento homeowners dealing with a lien still have full ownership and can sell.

How Selling Works When There Is an IRS Lien

The title company or escrow officer will discover the lien during the standard title search. From there the process typically works like this:

1. The title company contacts the IRS to request a payoff amount.
2. At closing, the lien balance is paid from your sale proceeds before you receive any remaining equity.
3. The IRS issues a Release of Federal Tax Lien, usually within 30 days of receiving payment.
4. The buyer receives clear title.

If your home has enough equity to cover what you owe, the process is relatively straightforward. The IRS gets paid, you keep whatever remains, and the sale closes.

If you are also behind on your mortgage and worried about the foreclosure clock, selling before the trustee sale completes is still possible - see can I sell my house in foreclosure for how that timeline works in California.

What If the Sale Price Does Not Cover the Full Lien?

This is where things get more complicated. If your home is worth less than the combined total of your mortgage balance and IRS lien, you have two main options:

Short sale with IRS approval. A short sale means your lender agrees to accept less than what is owed on the mortgage. If there is also an IRS lien, the IRS must separately agree to release its lien for less than the full amount. Both approvals take time and are not guaranteed. You will need a tax professional and a real estate attorney familiar with both processes.

IRS Certificate of Discharge. A Certificate of Discharge removes the federal tax lien from a specific property so the sale can proceed - even if the full tax debt is not yet paid. The IRS grants this when it determines its lien interest in the property has no value (for example, there is no equity left after senior debts are paid) or when you pay the IRS at least what its interest in the property is worth. The remaining tax debt does not disappear; it just detaches from that property.

If you are already watching deadlines and wondering how fast you need to sell to avoid foreclosure, an IRS lien adds urgency. Start the Certificate of Discharge process as early as possible - it can take 30 to 45 days or longer.

How to Request a Certificate of Discharge

Submit IRS Form 14135 (Application for Certificate of Discharge of Property from Federal Tax Lien) along with supporting documents: a current title report, an appraisal or comparable sales analysis, and payoff statements for any mortgages senior to the IRS lien.

The IRS has 30 days to act on a complete application. In practice, processing can run longer. If you have a firm closing date, file the application as soon as you have a signed purchase contract - or even earlier if you are serious about selling soon.

What We See at Ummah Homes

We work with Sacramento homeowners dealing with tax liens, code violations, deferred maintenance, and other complications that make a traditional listing difficult or impossible. We buy homes as-is for cash, which means:

• No repairs, no showings, no cleaning out the property
• We can close on your schedule, often in as little as two weeks once title is clear
• We coordinate directly with the title company and can walk you through the lien payoff and discharge timeline

We are a direct buyer, not a listing service. If the numbers work for your situation, we make a fair cash offer and close. If you just want someone to walk through the IRS lien situation with you at no cost, reach out. No pressure and no obligation.

Frequently asked questions

Can I sell my house if the IRS filed a lien but has not levied it?
Yes. A lien is a legal claim, not a seizure. You retain full ownership and can sell the property. The lien balance is paid from your sale proceeds at closing or addressed through a Certificate of Discharge before closing.

Does an IRS lien affect the buyer?
Buyers cannot accept a property with an unresolved federal tax lien because they cannot obtain clear title. The lien must be released before or at closing - it does not transfer to the new owner.

How long does a federal tax lien remain on the property?
A federal tax lien generally lasts 10 years from the date of assessment, though the IRS can refile to extend it. Selling your home before that window closes does not erase the underlying tax debt - the debt survives the sale unless it is paid or formally settled.

Can Ummah Homes buy my house if I have an IRS lien?
In most cases, yes. We factor the lien payoff into the offer and work with the title company to coordinate the release. Contact us with the details of your situation and we will tell you honestly whether it is a fit.

This article is general information only and is not legal, tax, or financial advice. Every homeowner's tax lien and title situation is different - no outcome is guaranteed. If you have a federal tax lien on your property, consult a licensed California real estate attorney and a qualified tax professional before proceeding. For free housing counseling, visit consumerfinance.gov to find a HUD-approved housing counselor near you.