Reviewed by: Brandon Brown  

Selling a Home with Back Taxes: What You Need to Know

Yes, you can sell a house with back taxes owed, but there’s a catch—those unpaid property taxes must be addressed before the sale is finalized. When taxes go unpaid for too long, the county or state places a tax lien on your property, meaning you can’t legally transfer ownership until the debt is settled. For homeowners who can’t afford to pay property taxes upfront, selling through a traditional buyer can be difficult. Most buyers and mortgage lenders won’t move forward with a home sale until the lien is cleared. That’s where FlipSplit comes in—offering a fast, as-is sale that simplifies the process and helps you move forward without worrying about delays, legal issues, or upfront costs.

What Happens If You Owe Back Taxes on Your Home?

What is a Tax Lien?

A tax lien is a warning from the government that you owe unpaid property taxes. If you don’t pay, the county, state, or federal government puts a legal claim on your home. This means you can’t sell or refinance your property until the tax debt is paid off. A tax lien doesn’t mean you’ll lose your home right away, but if the taxes owed remain unpaid for too long, the government can take action to seize and sell the home to recover the money you owe.

Different Types of Tax Liens

Not all tax liens are the same. There are three main types of liens that can affect your ability to sell your house:

• Property Tax Lien – Placed by the county or state when you fail to pay property taxes. This is the most common type of lien.
• State Tax Lien – Applied if you owe state taxes (may usually come from state taxes, income taxes, and etc.), which can attach to your house and other property. States can seize and sell properties to recover lost revenue.
• Federal Tax Lien – Issued by the IRS if you owe federal taxes, impacting your ability to sell your home.

Each lien type has different rules, but in most cases, they must be paid off before a home sale can go through.

What Happens If You Don’t Pay Your Property Taxes?

If you let your property taxes go unpaid, here’s what can happen:

• Growing Debt and Interest – The longer you wait to pay taxes, the more you owe. Most states charge interest and penalties, making the debt grow over time.
• Risk of Foreclosure – If your delinquent taxes go unpaid too long, the county can initiate a tax foreclosure, meaning you could lose your house.
• Tax Sale or Auction – Some counties hold a tax sale or auction, where the property is sold to recover unpaid taxes.
• Difficulty Selling – Most buyers and investors won’t take on a house with an unresolved tax lien unless it’s cleared before closing.
• Tax Lien Certificate Sale – In some areas, counties sell tax lien certificates to investors. The buyer of the lien can collect payments from you, and if left unpaid, they can eventually claim ownership of the home.

The sooner you take action, the better. Whether you pay off the debt, negotiate with the county, or sell home fast to a cash buyer, there are ways for you to move forward.  

How Can You Sell a House with Back Taxes Owed?

Pay Off the Taxes Before Listing (Best for homeowners with available funds)

If you have the money, the easiest option is to pay property taxes before listing your house. This allows you to attract more buyers and avoid complications at closing.

• Use savings or a loan to settle the debt before putting the home on the market.
• A tax-free home sale makes the process smoother and more appealing to traditional buyers.
• If you have a federal tax lien, the IRS may allow you to negotiate a partial payment plan.

Sell the Home and Use the Proceeds to Cover Taxes (Best for homeowners with equity in the home)

If you have enough equity, you can sell your house and use the proceeds to pay off the unpaid taxes at closing.

• A closing attorney or title company ensures that the taxes owed are deducted from the home sale proceeds.
• Works best if your home’s value is high enough to cover the mortgage, tax debt, and closing costs.
• If multiple liens exist (such as a mortgage and property tax lien), the sale must cover all debts before you receive any profits.

Request a Tax Lien Release to Sell First, Pay Later (Best for sellers with limited equity)

Some counties allow a conditional tax lien release, meaning you can sell the property first and pay the debt after closing.

• Requires county approval, which can take time.
• If granted, the lien is temporarily lifted, allowing the house to be sold, with repayment handled at closing.
• This is usually granted only if the county sees a high chance of tax repayment through the home sale.

Sell to a Direct Home Buyer for a Fast, As-Is Sale (Best for homeowners looking to avoid delays and costs)

If you can’t afford to pay property taxes before selling and don’t want to wait for a buyer, selling to a direct home buyer is an ideal solution.

• No upfront payments – The buyer handles the tax lien, so you don’t have to.
• No repairs, commissions, or closing costs – Keep more of the profit from the sale.
• Fast closings – Many home sales close in days or weeks, not months.
• Avoid the risk of deals falling through – Traditional buyers may back out, but a cash buyer like FlipSplit eliminates that uncertainty.

At FlipSplit, we buy homes as-is, even if you have delinquent taxes or a property tax lien. We handle the legal process, so you don’t have to worry about paperwork, payments, or delays.

Other Things to Consider When Selling a Home with Back Taxes

How to Avoid Tax Liens in the Future

If you’re staying in your home, here’s how to avoid future tax liens:

• Set up a payment plan with the county if you’re struggling to pay taxes.
• Apply for property tax exemptions if you qualify.
• Keep track of due dates to avoid penalties.

Do Tax Liens Affect Your Credit?

A tax lien can negatively impact your credit score, making it harder to get a mortgage loan in the future. Some states no longer report tax liens to credit bureaus, but delinquent taxes can still be a red flag for lenders.

Can You Buy a House with a Tax Lien on It?

Some investors specialize in buying homes with tax liens, but for the average buyer, it’s a risky purchase. If you’re considering buying a house with a lien, you’ll need to research the legal implications, check whether the lien can be cleared, and possibly negotiate with the county to settle the debt.

When to Get Legal Help

If you’re unsure about your options, a real estate attorney can help navigate the process, especially if you’re dealing with multiple liens, tax sale notices, or court involvement.

Sell Your Home and Resolve Your Tax Debt with FlipSplit

Selling a house with back taxes owed is possible, but you need to clear the debt before closing. Whether you pay off taxes, use your home sale proceeds, or negotiate a lien release, there are ways to move forward. If you’re looking for a fast, stress-free sale, FlipSplit is here to help. We buy homes in any condition, even those with unpaid taxes, and handle everything from legal paperwork to clearing tax liens. Need to sell a home with back taxes? Get a no-obligation cash offer from FlipSplit today!

Reviewed by: Brandon Brown

As a long-time Asset Manager, Investor, Real Estate Agent, and Broker/Owner of BayBrook Realty in Orange County, Brandon Brown is one of FlipSplit’s lead Real Estate experts. Having worked on over 2,000+ real estate transactions, Brandon brings a depth of knowledge that ensures clients are appropriately treated with honesty and integrity. His insights and advice have been published in numerous blogs beyond FlipSplit, and he keeps a close eye on market trends and statistics, which are updated weekly on his social media pages. Outside work, you can find him participating and serving at church, cycling, mountain biking, surfing around Orange County and beyond, and enjoying time with his wife and two daughters.