Does a Tax Lien prohibit effective use of Quit Claim in real estate transfer
Our home is ''seller-financed'' to my wife and me by my mother-in-law. We have both been affected by the poor economy and lay-offs, and are several months behind on mtg payments, and cannot afford presently to pay taxes or insurance on the home either. To make things even worse, the IRS has a tax lien on the house due to unpaid taxes from 1998. ''Mom'' is worried about the house, and wants to protect it as an assett that yields income to her, and wants to put it back in her name so she can take out insurance (must be in her name to do that).
We thought a Quit Claim deed may work, but will the tax lien stop that cold?
2 Answers from Attorneys
Re: Does a Tax Lien prohibit effective use of Quit Claim in real estate transfer
I'm not sure a quit claim deed is the way to go. A quit claim deed would give your mother-in-law whatever title you have, but would do nothing about the IRS lien.
Because your mother is the mortgage holder in a seller financed situation, would it not be better simply to have her foreclose, thereby shutting the IRS out if they do not bid at the foreclosure auction?
By the way, from my experience, the IRS very rarely forecloses on a lien on a personal residence. The purpose for the lien is to force you to give them any cash proceeds from a sale of the house.
Also, if you are concerned about having to jump through all the hoops associated with having your mother-in-law foreclose, you may want to approach the IRS and see if they'll release the lien. As long as its not a situation where there is significant equity in the house, they typically will let go of their lien (after all, its pointless for them not to, as the lien will be extinguished in the foreclosure process).
I hope this helps.
Re: Does a Tax Lien prohibit effective use of Quit Claim in real estate transfer
Yes. Of course more facts as to exactly what you want done might change the outcome.
Joel Selik
www.taxworkout.com
Attorney At Law*
Representing Taxpayers in all 50 States
And Internationally
*Licensed to practice law in CA and NV only, in other locations acting as tax representative.
Related Questions & Answers
-
Limited Property Value and Taxation I owned 57 acres of undeveloped property... Asked 10/24/01, 5:48 pm in United States Arizona Tax and Taxation Law
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
