Selling a House With Tax Liens or Back Taxes
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Tax problems and houses often go together. Property taxes fall behind during a hard stretch, an inherited house comes with years of unpaid bills, or an IRS lien lands on everything you own. A lien does not prevent a sale, but it does have to be dealt with before the buyer can get clear title. In most cases that happens at closing, out of the sale proceeds. Here is how the most common tax liens work in a sale.
Back property taxes
Unpaid property taxes become a lien on the house, and interest and penalties keep growing. If they stay unpaid long enough, the county or city can sell the tax lien or the property itself at a tax sale, depending on the state. Timelines and redemption rights vary a great deal from state to state, so find out exactly where your property stands with the county treasurer or tax collector. When you sell, the title company gets a payoff figure for the taxes and pays them from the proceeds at closing.
IRS federal tax liens
Estate tax liens on inherited houses
If the house comes from an estate large enough to file a federal estate tax return, a federal estate tax lien can apply even though nothing is recorded. The IRS says an executor or administrator appointed in the United States can apply for a discharge of the estate tax lien with Form 4422. The estate's attorney or accountant will know whether this applies.
Other liens that show up
State tax liens, municipal liens for water, sewer or trash bills, code enforcement liens, judgment liens and contractor mechanics liens can all appear on a title search. The title company identifies them and gets payoffs, and they are usually paid from the proceeds at closing in order of priority. If the liens add up to more than the house is worth, some lienholders may need to agree to accept less before the sale can close.
How we handle houses with liens
Common questions
Related guides
Inherited house
Who has authority to sell, probate basics, multiple heirs, the mortgage that remains and inherited basis for taxes.
Read the guideForeclosure
The 120-day federal rule, your options before a sale date, selling to protect equity and how to spot rescue scams.
Read the guideCode violations
Open violations, fines that turn into liens, unpermitted work, point-of-sale inspections and selling anyway.
Read the guideDivorce
Who has to sign, court orders during a divorce, buyout versus sale, and the home-sale tax exclusion.
Read the guideRelated articles
- Behind on Property Taxes in Philadelphia: What You Can Do
Owner-Occupied Payment Agreements, how tax sheriff sales work, and selling a house with back taxes.
Sources
- IRS Taxpayer Advocate Service, Lien Discharge
- IRS, Sell Real Property of a Deceased Person's Estate
- IRS Publication 783, How to Apply for a Certificate of Discharge
Last reviewed: September 2026. General information only, not legal or tax advice. Rules vary by county and municipality and change over time; talk to a local real estate attorney or title company before you decide.
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