Can I Get a Mortgage If I Owe Back Taxes?

Oct 1

The quick answer is yes, it is possible to get a mortgage even if you have unpaid taxes. However, the process may be more difficult than it would be otherwise. Here's what you need to know about getting a mortgage with back taxes.

Characteristics of tax liens that make them more difficult to finance:

They are usually for large sums of money
They have priority over most other debts, which means that if the property is sold, the tax lien must be paid off before any other debts
They can last for many years
The IRS can seize assets such as bank accounts or real estate in order to satisfy the debt

How to get a mortgage if you owe back taxes:

There are a few things you can do to make getting a mortgage with back taxes easier.

The first is to work with a lender who specializes in helping people with tax liens. There are many such lenders out there, and they may be more understanding and flexible than regular lenders.
Another option is to try to negotiate a payment plan with the IRS. If you can show that you're capable of making regular payments on the debt, the IRS may be willing to work with you. This will make it much easier to get approved for a mortgage.
You could also try to settle your debt for less than what you owe. This is called an "offer in compromise," and it may be possible if you can't pay your full tax liability or if doing so would create a financial hardship. It's important to note that offers in compromise are very difficult to get approved, but it's worth exploring if you're struggling to pay your back taxes.

Assuming you owe back taxes and are looking to purchase a property, there are a few things you need to do in order to increase your chances of being approved for a mortgage. While it may be more difficult than usual, it is still possible to get a mortgage with back taxes owed. Work with a specialized lender and/or try to negotiate a payment plan with the IRS in order to improve your chances of being approved for financing.

Tips for Dealing with IRS Debt

If you find yourself owing money to the IRS, you're not alone. In fact, according to a report from the Treasury Inspector General for Tax Administration, nearly 10 million taxpayers owed the IRS a total of $131 billion in 2017. But just because you're in debt to the IRS doesn't mean you're out of options. Here are four tips for dealing with IRS debt.

1. Talk to the IRS. The first thing you should do if you find yourself in debt to the IRS is to contact them. The agency may be willing to work with you to set up a payment plan that fits your budget. If you're not able to pay your debt in full, the IRS may also be willing to accept a partial payment.

2. Consider an offer in compromise. If you're not able to pay your debt in full and you don't qualify for a payment plan, you may be eligible for an offer in compromise. This is an agreement between you and the IRS that allows you to settle your tax debt for less than the full amount you owe. To qualify, you'll need to prove that paying your full tax bill would create a financial hardship or that doing so would be unfair or inequitable.

3. Request an Equifax Credit Report extension on filing your return.. If you can't pay your taxes when they're due, you can request an extension from the IRS. This will give you extra time to file your return and pay what you owe without incurring any penalties or interest charges. Just remember that an extension on filing your return is not an extension on paying your taxes—you'll still need to pay any taxes owed by the original April 15 deadline or incur penalties and interest charges.

4. Check into tax relief programs.. If you're facing financial hardship, there are certain tax relief programs that may be able to help lessen your burden. For example, the Low Income Taxpayer Clinic program provides free legal assistance to low-income taxpayers who need help dealing with the IRS. You can find more information about this program and others on the IRS website.

Dealing with IRS debt can be daunting, but it's important to remember that you have options. By taking advantage of one or more of the tips above, you can get your finances back on track and put yourself on the path to a bright future.