Can You Sell Your House with an IRS Lien on It
Yes—But Not Without the IRS Getting Involved
If the IRS lien filed against you, it becomes a public claim on your property—including your home. This doesn’t mean you can’t sell it, but it does mean the IRS has a legal right to collect proceeds from the sale before you get paid.
The good news? There are ways to negotiate with the IRS so you can move forward with the sale—without losing everything.
In this post, we explain how IRS liens work during real estate transactions, how to protect your equity, and how to resolve your tax debt in the process.
What Happens When You Sell a Home with a Federal Tax Lien?
The IRS lien attaches to:
- Your real property title
- Any equity you have in the home
- The sale proceeds at closing
When you try to sell, your title company or escrow officer will flag the lien during the title search. The sale can’t close until the IRS is paid—or agrees to release or subordinate the lien.
Related: IRS lien filed against you? What It Means and What to Do Next
Step 1: Know How Much You Owe and When the Lien Was Filed
Start by:
- Requesting a copy of the IRS lien notice (Form 668(Y))
- Ordering a title report to confirm which liens exist
- Pulling your IRS Tax Transcripts to verify balance and history
You’ll need this info to plan the sale and negotiate with the IRS.
Step 2: Evaluate Your Options
Depending on how much equity you have, there are three main options:
1. Full Pay-Off from Sale Proceeds
If your home has sufficient equity, the lien will be paid off at closing, and the IRS will automatically release the lien once funds are processed.
2. Lien Subordination
If you need to refinance or sell and repay a mortgage, the IRS may agree to subordinate the lien. This allows the sale to proceed while keeping the lien attached to any leftover proceeds.
Use Form 14134 – Application for Certificate of Subordination.
3. Lien Discharge
If there’s little to no equity after paying off mortgages, the IRS may release the lien and allow the sale to go through if you’re entering a settlement or payment plan.
Use Form 14135 – Application for Certificate of Discharge.
Step 3: Show the IRS a Resolution Plan
The IRS won’t just release the lien without a broader plan. Be ready to propose:
- A Partial Payment Installment Agreement
- A Pending resolving debt through an Offer in Compromise
- Use of proceeds to reduce balance
Related: IRS Collection Appeals Program (CAP) vs. CDP Hearings – What’s the Difference?
Step 4: Don’t Wait Until You’re in Escrow
IRS lien processing can take 30+ days, depending on documentation and IRS backlog. If you wait until escrow opens, the sale may fall through.
Act as soon as:
- You list the home
- You get an offer
- You know a lien is present
A tax professional can help you fast-track the release or subordination paperwork, while also advising on potential risks like IRS wage garnishment enforcement, an IRS notice of intent to levy, or challenging IRS penalties if your balance remains unresolved.
We Help Orange County Homeowners Resolve IRS Liens Before Sale
At Boulanger CPA and Consulting PC, we help clients:
- Request lien discharges and subordinations
- Navigate escrow with lien coordination
- Resolve IRS debt before or after closing
- Avoid forced sale or equity seizure, including California FTB lien and levy actions
Call (657) 218-5700 or request a strategy call at www.orangecounty.cpa
We’re local, responsive, and experienced in tax lien resolution—helping you protect your home, equity, and financial future. To dive deeper into strategies, explore more in Defend What’s Yours.
Frequently Asked Questions
Can I sell my home if the IRS filed a lien?
Yes, but the lien must be addressed before the sale closes. The IRS has a legal claim on proceeds until the tax debt is satisfied or the lien is released.
What are my options for removing an IRS lien before selling?
Options include paying the tax debt in full, negotiating a lien release or withdrawal, or applying for a lien subordination to allow the sale to proceed.
Will the IRS take all proceeds from the sale?
The IRS will collect from sale proceeds only up to the amount of the debt. If proceeds are insufficient, the remaining balance will still be owed.
Can I refinance with an IRS lien on my property?
Refinancing is difficult with a lien, but subordination may allow your lender to proceed while the IRS maintains its claim on proceeds.
Does bankruptcy remove an IRS lien before a sale?
No. Bankruptcy may discharge the underlying tax debt but does not remove an IRS lien already recorded on your property.
Can the IRS approve a lien discharge for one property?
Yes. The IRS may discharge a lien from a specific property if you can show it will not harm their ability to collect the debt from other assets.
Does California handle IRS liens differently?
No. IRS liens are federal and apply nationwide, but California property transfers require proof the lien is satisfied or properly addressed before closing.
Should I hire a professional to handle a lien sale?
Yes. Tax professionals and real estate experts can help negotiate with the IRS, coordinate with escrow, and protect your interests during the sale.
📣 About the Author
Marc Boulanger, CPA is the founder of Boulanger CPA and Consulting PC, a boutique tax resolution firm based in Orange County, California and trusted by high-income individuals and business owners across Southern California.
With over a decade of experience resolving high-stakes IRS and State tax matters, Marc brings strategic insight to complex cases involving wage garnishments, bank levies, unfiled returns, and six-figure tax debts. He is known for helping clients reduce or eliminate tax liabilities through expertly negotiated settlements and compliance plans.
Marc is a Certified Public Accountant licensed in California and Oklahoma and holds the designation of Certified Tax Representation Consultant. He is a member of the American Society of Tax Problem Solvers (ASTPS) — the national organization founded by the educators and practitioners who have trained thousands of CPAs, EAs, and tax attorneys in IRS representation strategy.
Every case is handled with discretion, proven methodology, and direct CPA-led representation — not call center scripts.
📍 Learn more at www.orangecounty.cpa or call (657) 218-5700.
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