A tax foreclosure can happen for many reasons. Most states allow investors to acquire properties by paying the back taxes and the federal government seems to be able to do anything they want to collect back taxes, which includes stealing your home. The whole issue of personal income tax is highly in debate as it is, so if you lose your home due to taxes, you may be able to fight back. For our purposes, we’ll just assume that you did actually owe the taxes that you’re being foreclosed on for. This will make it simple for everyone to understand. If you don’t owe the taxes, then you should be seeking a tax attorney, rather than a foreclosure specialist. Once you use our free evaluation, we can direct you towards legal council that can help with other legal problems.
When you purchase your home, you need to understand the 4 basic expenses: Monthly payment, Interest, Taxes, and Insurance. These four items combined, usually make up your monthly payment. When you stop paying your mortgage, your lender will usually take over and make these payment for you. They are willing to do this, because if the taxes are not paid, the government (or an authorized investor) can take the home. Once the lender has paid your taxes, you will have to repay them, rather than the respective government body.
If a federal tax lien is threatening your mortgage, you’ll need to work out a settlement plan with the IRS. In many cases, you can do this on your own, but for larger dollar amounts, it may be best to work with an attorney. Chances are, if you are facing foreclosure because of back property taxes, the court will allow an investor to pay the tax and take control of the deed. In these cases, you’ll need to pay off the investor to get your deed back. If you have a mortgage, your mortgage company will likely pay these back taxes, to avoid losing the deed to an investor.
There are many cases, where a home can fall into foreclosure, because the owner though the taxes were being paid by the mortgage company. This is something that should always be verified at closing. You always need to know what your monthly payment consists of and who is paying the taxes and insurance.
Once a tax lien has been filed against your property, you will have a specified amount of time to pay the lien as well as any penalties and interest. If the lien is not paid, the lien holder can start the foreclosure process and you risk losing your home.
Once a tax foreclosure has started, the only want to stop it is to pay the total lien, or negotiate some sort of settlement.
Many people thing they can dispute the lien once it’s on the property, but by the time the court has allowed the lien, it’s usually too late. This is why you should always go to court if someone is filing a lawsuit or legal action against you. Even if there is nothing you can do, you need to know what is happening and what steps you can take to avoid any future trouble.
Tax liens and tax foreclosures are not something to take lightly. If you suspect a lien has been placed against your property, then you should immediately do a basic title search to find out for sure. Even if you don’t suspect a lien, it’s probably a good idea to make sure no one file a lien without your knowledge. It’s estimated that 40% of Americans have had a lien against their property that they didn’t know about!