Buying a home is a huge milestone, but what if you owe taxes? Many people wonder if they can buy a house with tax debt. While it might seem like a big hurdle, the answer is yes. You can buy a home even with tax obligations, but you need to follow certain steps.

What is a Tax Lien?

A tax lien is a legal claim on a property due to unpaid property taxes. It can be for property taxes or municipal fees. When a tax lien is filed, it becomes public, making it hard for buyers. Ignoring tax liens can lead to foreclosure in just a few months if the debt isn’t paid.

How to Get a Home Even with Tax Debt?

1. Get Clear on Your Tax Situation

Before applying for a mortgage, know where you stand. If your tax debt exceeds $10,000 and you don’t have a payment plan, the IRS may place a lien on your assets. Unpaid property taxes can also result in state and local liens that further complicate the home-buying process. Addressing this early avoids surprises during your mortgage application.

2. Set Up an IRS Payment Plan

Setting up a formal payment agreement can help prevent or remove liens. IRS installment plans, such as short-term plans (180 days) or longer-term arrangements, demonstrate responsibility to lenders and keep your tax liabilities under control.

3. Pay Down Your Tax Debt

Reducing your tax debt improves your financial standing. Using a tax refund, like the average $3,050 refund reported in 2024, can lower your outstanding debt significantly and improve your mortgage approval odds.

4. Consult a Tax Pro

Working with a tax expert can provide a custom plan to handle IRS debts, keep you on track with the rules, and help you qualify for a mortgage. Schedule a consultation here to get the help you need.

Financing Options With Unpaid Taxes

Some lenders will work with you even if you owe taxes. For example, Avant Personal Loans offers up to $35,000 with a credit score as low as 580. Upstart goes even further, accepting scores as low as 300 and lending up to $50,000.

Showing you’re serious about paying off your tax debt can help you get better mortgage terms. Lenders want to see that you’re responsible and stable.

Before applying for a mortgage, understanding your financial health is crucial. Use our Debt-to-Equity Ratio Calculator to assess your financial standing and determine if you’re in a strong position to secure a loan.”

How to Find Delinquent Properties Near Me

Investors often look into tax delinquent properties, which are homes auctioned due to unpaid property taxes. Purchasing these tax lien properties can be financially beneficial but comes with certain risks and responsibilities.

• Check with your local tax assessor’s office for upcoming auctions.
• Use online platforms specializing in tax lien property sales.
• Stay informed via community notices about tax delinquent auctions.

So, buying a home even when you owe taxes is possible if you understand your tax responsibilities, set up a clear repayment plan, and work with the right professionals. With the right steps, you can secure financing and potentially explore lucrative opportunities like tax lien properties. The key is to stay informed, proactive, and well-prepared for any financial obligations.

Looking to clear up your back taxes before investing? JC Castle Accounting can help.

Schedule your FREE consultation and let us guide you through the process so you can invest in tax lien properties with confidence.

FAQ

Can I buy a house if I have tax debts?

Yes, you can buy a house with tax debts. You’ll need to manage your taxes and show lenders you’re serious about paying them off.

Can you get a mortgage if you owe taxes?

Yes, but it depends on the lender’s policies and your debt management. Arranging a payment plan and actively reducing tax debts significantly increase your chances.

Can you own someone’s house if you pay their taxes?

Not directly. Paying someone else’s taxes might result in a lien, but ownership typically requires purchasing the property through a tax sale or foreclosure auction.

Can you buy a house if you owe the IRS?

Yes, buying a house is possible, but you’ll need to actively manage your IRS debt through repayment plans or settlements to secure financing.

How do tax liens affect my credit score?

Tax liens can really drop your credit score. Lenders see tax debt as a big risk when they’re deciding on loans.

What should I consider about my tax liability before buying a house?

Knowing your tax situation is key. If you’re paying off taxes or in a payment plan, it can help you buy a house.

What are tax delinquent properties?

Tax delinquent properties are homes with unpaid taxes. They often go to auction, but buying them comes with risks.

How can I find tax delinquent properties near me?

Look for them on local government websites, online real estate sites, or auction websites for tax lien properties.

What are the benefits of buying tax lien properties?

Buying these properties can mean lower prices. It’s a good option for those with financial struggles, but be careful of the risks.

What are the benefits of homeownership, even with tax debt?

Homeownership lets you build assets and equity. It also offers tax breaks for mortgage interest and property taxes. Plus, it can grow your wealth over time.