How to Avoid a Property Tax Lien

If you fail to pay your taxes, you may have property liens placed on your homes, land, vehicles, bank accounts, and other property, including your business. The government then limits what you can do with your property until you pay your debt. In some cases, the government may seize your property and sell it to satisfy the debt.

Steps

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    Pay the taxes you owe, in addition to other debts for government services like special assessment and sewer fees. Property tax liens harm your credit rating, and your debt to the government becomes public record. Additionally, fees and interest are assessed on your tax debt, so you will have to pay more to have your property released from the lien
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    Remember that if a lien is attached to another property you own, it can be attached to another property you buy after the lien was placed. If you are married and your spouse's property has tax liens attached, the government could place a lien on property you buy jointly.
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    Consider incorporating your business. If your corporation has a tax lien attached to its assets, you can avoid a property tax lien being attached to your personal property.
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    Take steps to ensure you don't purchase a property that has a lien attached.
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    Conduct a title search before buying real estate. Liens on real estate transfer from seller to buyer, who then becomes responsible for paying the tax debt.
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    Ask taxing authorities in the property's jurisdiction if it has liens. Authorities usually take steps to prevent property from being sold before taxes are paid, it sometimes happens that ownership changes hands while the lien is attached. Incautious buyers can discover that they have not only acquired the property, but the tax debt also.
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    Consult an attorney before filing for bankruptcy. Real estate liens are paid in order according to their age. When your property sells, other liens may have to be paid first, leaving the tax liens on your hands. An attorney can help you take the proper steps to make sure your tax liens are paid.

Tips

  • A property tax lien can apply to real property (your home or land), tangible personal property (your vehicle or boat) or intangible property due you (bank accounts, wages or rent income).
  • Some investors seek out properties that have tax liens attached. They buy a tax lien certificate, which means that they lend the owner money to pay the tax lien. The owner then owes a debt, plus interest, to the investor, who may decide to foreclose on the property if the debt is not paid within a reasonable time.

Warnings

  • Do not buy property with tax liens sight unseen. The property itself may be worth less than the debt owed.

Sources and Citations

Article Info

Categories: Taxes and Fees