Do you have a tax lien on your house in the state of New Hampshire? This means that you likely have unpaid income taxes, property taxes, or business taxes, and a government department has put a lien on your home, according to Investopedia.
This may be a problem as a government agency, in this case, has a legal right to your property and may be able to collect on that property. Essentially, the government agency can have a stake in the home to compensate for whatever tax money is still owed to the government.
You may be wondering, “Can I sell my house with a tax lien?” If you try to sell your house with a tax lien in New Hampshire, you may face various complications. This is especially true if the lien is not voluntary. Yet, it is possible to sell your house.
In this guide, we will teach you how to sell your house with a tax lien in New Hampshire. There are multiple steps you can take, such as disputing the tax lien with the IRS, paying off the unpaid taxes, or even paying off the lien once you’ve sold your home during the closing, using your closing costs.
Keep reading to learn all about selling a house with a tax lien in New Hampshire. Let’s get started!
What is a House in Lien
A tax lien on a house is a debt claim against this particular asset. Your home is usually your biggest asset unless you own some other huge investment. A home tax lien essentially prohibits you from selling your home and taking the entire profit made without meeting the requirements of the tax lien.
As such, you are probably still thinking – can I sell my house with a tax lien in New Hampshire? Luckily, there are steps you can take to work with the New Hampshire Department of Revenue. The simplest thing is to pay off your back taxes. You can also work with agencies or a tax attorney who assists with helping people gain tax debt relief.
There are two different types of tax liens. Along with the state tax lien, you may also be facing a federal tax lien or IRS tax lien, which the IRS places on your home when you owe the agency unpaid income taxes.
When government agencies place a tax lien on a house, private entities may become part of the issue. Your city or county can sell a tax lien certificate to outside investors. If you have not paid off your property tax liens, then the private investor who bought the certificate could foreclose on your house to pay off the tax debt.
Yet, you can probably avoid foreclosure and work with the private investor to create a payment plan to relieve your debt and potentially sell your home without any tax liens left.
What are Real Estate Taxes in New Hampshire
New Hampshire is one of five states that does not charge a sales tax upon the sale of a home, according to List with Clever. Most home sales do not have any taxes associated with them as long as certain requirements are met.
As long as you’ve resided in the home for at least two years and made no more than $250,000 in profit from the house sale, then no taxes will be associated with the sale.
However, if you’ve lived in your home for less than two years, you’ll need to pay a specific amount of tax on the profit made over the $250,000. The tax rate, in this case, will depend on how long you lived in the home.
Other real estate taxes in New Hampshire include a real estate transfer tax, which is all about transferring the ownership of the house title from the original homeowners to the home buyers. A title search is usually part of this process. New Hampshire’s transfer tax is 0.75 percent of the home sale.
Furthermore, New Hampshire has the third-highest property tax rate in the United States, which means more people may be at risk of facing unpaid property taxes. Yet, there are certain regions in this state that have lower property tax rates for the average taxpayer.
Can You Sell a House in Tax Lien in New Hampshire
So, can I sell my house with a tax lien in the state of New Hampshire? First, it is best to cover your delinquent taxes and obtain a lien release before you try selling your home in New Hampshire.
If you don’t attempt to pay off your back taxes, then you may face legal actions from the state or federal government. This means you may even lose your home if a government agency takes a lien on your property.
For example, 72-year-old Bedford resident Richard Polonsky became disabled after prostate surgery and was unable to pay back about $17,000 in delinquent taxes, according to New Hampshire Magazine.
The state then took legal action and foreclosed on his home, valued at around $300,000. Essentially, Polonsky lost his home because he didn’t pay his back taxes.
Yet, you might find that selling your house is the only way to pay off your tax lien through sales proceeds. As such, you will want to put your home on sale as soon as possible to avoid ongoing penalties and interest related to the back taxes and lien.
To sell your home more quickly and get a cash offer fast, you may want to contact companies that buy houses in New Hampshire. In this case, you won’t need to work with a real estate agent. Selling your house fast is important when trying to get a lien release. Depending on where your home is located, you may want to find cash home buyers in Salem.
Things to Know About House Selling Taxes in NH
The real estate transfer tax rate is the most important home sale tax in New Hampshire you’ll need to pay attention to. Both the home buyers and the sellers are responsible for paying their portion of the real estate transfer tax upon the sale of the home.
The real estate transfer tax rate is $0.75 for every $100 of the sale price. Yet, there are exceptions to the real estate transfer tax, such as:
- Transfer between spouses upon a final decree of divorce
- Non-contractual transfers between parties
- Transfers of cemetery plots
- Transfers to the state of New Hampshire, counties, or other municipalities
- Filing a correction to a deed
Do you have any back taxes related to your property? Then, you will have to pay off these property taxes before selling your home. In New Hampshire, the average property taxes are $5,230 or 1.99 percent of your property value.
There are also tax breaks you can get upon selling your home in the state of New Hampshire. You may be able to deduct up to $10,000 of the annual property tax as long as you pay your property taxes before the time of closing.
You might also be able to deduct the majority of the interest you paid on your loan from the mortgage lender for houses valued up to $750,000.
How to Sell a House with Tax Lien
There are multiple steps you can take to sell a house with a tax lien. These steps involve resolving the tax lien and are outlined below.
- Dispute the tax lien with the government agency or IRS
- Get a certificate of discharge
- Pay off the delinquent taxes
- Cover the rest of the lien amount upon closing of the home sale
- Wait for your debt to expire, but this is rather unlikely to occur
When disputing the tax lien, it is much easier if the lien put on your house was for taxes that were already paid or if the lien against the home isn’t yours. The IRS usually sends letters as its form of communication and may call as well. You would benefit from speaking with an experienced tax advisor before disputing the tax lien with the IRS.
You can also try requesting a certificate of discharge, which will remove the lien from your home. However, this doesn’t put an end to your tax debt. You will still need to pay off your back taxes, or the government may put a lien on some other form of property, such as your vehicles.
You may also pay off your back taxes altogether to put an end to the lien. If you don’t have enough in savings, you may want to get a home equity line of credit to pay off the lien.
You can also sell your house and pay off the lien with the proceeds from the sale. Lastly, you can wait for the ten-year statute of limitations to expire so that you won’t need to pay off the tax lien. Then you can safely sell your home. Yet, usually, the IRS will file legal action against you before the statute of limitations expires.
After reading this guide, you should know how to properly sell a home that has a tax lien in the state of New Hampshire. You can sell your place and cover the costs of the tax lien upon closing.