Hello everyone, great thread. I am looking at a home with a $150k IRS tax lien. Home should be valued around $540k. What is the likelyhood of the IRS coming for their money? I would like to renovate teh home asap, and waiting 120 days would be difficult. Someone mentioned that teh IRS may allow you to pay them less than what is owed. Any idea what that may look like in my case?Also, if I were to contact the IRS asking if the property will be redeemed, how long would it be until they get back to me? Does anyone have experience with this? Thank you for your help.
I have heard from others that alerting the IRS to the situation is not a good idea, and that it’s best to just try to fly under the radar. In your case, because so much is owed and the house will cover that amount, I would not be surprised if they came calling, but I still don’t think I’d call them first. I have heard stories from people who have contacted the IRS, and were told someone would get back to them, and they ended up having to wait the 120 days anyway. So as to your question about how long it would be until they get back to you, the answer is that they may not get back to you at all. As for whether the IRS will negotiate for a lower payoff, yes they might. The question is whether it’s worth it to you to risk raising their awareness as to this particular property.
Mike,
Thank you for your response. I do not think I would contact them, but I had to ask the forum. So if they call I will, without a doubt, have the option of paying off the loan? If this is the case I could still renovate and hope they don’t call. If so, then pay it off.
Well, understand that mine is just one opinion and I am basing that only on speaking with others. As to your question of whether you have the option to pay off the lien, I would think so, but considering how much money you’re talking about, I would recommend that you run this scenario by a local real estate attorney who is familiar with this process. You have too much at stake here to be only taking advice from people on the Internet. Speak with an attorney.
I will speak with an attorney. Thanks for your help. Another issue, I have read online that if the IRS does redeem the property that they repay the purchase price AND interest. Is this true? True in California? Thanks for the help.
That is my understanding as well, but again, I don’t know for sure. And in any case, what is their interest rate? Probably about 0.01%, so I’m thinking it would be essentially nothing.
The IRS used to have a dept. that actually tracked all fcl. sales where they got the required notices and would solicit guaranteed bidders so they could redeem. Those of us who have been around 10 years or longer have all had properties redeemed. I forget the interest rate that was paid. You could/can also recover money spent to secure the property. Obviously you can’t recover repairs. Now with almost no one around w. any equity - they no longer track a fcl. except in VERY rare instances where a particular agent is on a case.