View random article

What Are Government Tax Liens?

A tax lien is imposed on a property with the aim of collecting taxes. It is a government’s right to restrict the use of a property or reclaim the property particularly if debts are not paid on time. This can cover not only the existing property but even a future property.

In the U.S., state and federal governments have the right to seize a property when people are not paying their taxes properly. In other countries, however, governments may only have the right to hold the property for a specific period of time until the person concerned pays the taxes due. In the event the person who owes the government fails to pay his taxes after being given an allowable time, the government can decide to sell the property. Additionally, if the amount gained from the sale of the property concerned falls short of what the person owes the government, other assets maybe seized.

Another use of a tax lien apart from being imposed on properties is in the collection of unpaid income taxes. This is normally initiated by the U.S. International Revenue Service (IRS).

As liens means there is still something owed to the government, make sure that you check the property you’re buying if it has any liens against it. Keep in mind that you will need to pay those taxes due when you buy a house with a tax lien. You have to clarify this with the seller during negotiations whether you will be responsible for paying it or not. Consulting a real estate agent regarding this will benefit you greatly.

Featured in Finance