HOMEOWNER´S WITH TAX LIENS
Ever since the Great Recession, we have fielded hundreds upon hundreds of calls from Taxpayers who have one of two situations. They either have a home with equity, which they cannot access, due to tax debts. Or they have no equity in an upside down house, with little chance of ever getting real equity. So what do you do?
For those taxpayers who have equity in their house, in certain situations, we can help you get to that equity. Before doing that though, we recommend that you do your homework first. Have a Tax Professional determine every option you have in the Internal Revenue Code, or State Revenue Code, to figure out all of the options you have for dealing with your tax debt, because you may be able to lower what you have to pay.
Suppose you qualify for an Offer in Compromise or Penalty Abatement, and have the potential to lower what you owe. Yet, a Tax Professional states that you meet the requirements for getting to the equity in your home; do you really want to simply hand a blank check over to the IRS? Or do you want the best option available to you, for your situation? We can help you determine your options, and if that means getting to your equity is best, and you qualify, we will put that together for you.
If you have no equity, owe the IRS, and are in a situation where you have a large house payment, it gets a little more complicated. In determining many “tax relief” options in the Internal Revenue Code, we have to take into consideration certain expenses you have. The IRS has maximum amounts for certain expenses, and if you go over those maximum amounts, the IRS will expect the difference to be paid to them.
So if you’re paying $2500 monthly for your house and the IRS only allows $1500 for housing, that’s a monthly difference of $1000 that has to be calculated into determining every option the IRS has. If you owed the IRS $30,000, would it be possible to walk away from the home, and then make those payments to the IRS? After all, if you have little chance of getting equity again, should you consider that as an option?
The truth is that most of the conversations we have with taxpayers in that position don’t go to well. Taxpayers are reluctant to leave their home. Yet, in determining your options, a good tax resolution company will not just tell you want you probably want to hear, but the hard, sometimes cold truth. If a tax company is not willing to do that with you, you are dealing with the wrong company. Companies that do that, usually sell you what you want to hear, and a year or so down the line, you find out the tax solution they offered has been rejected.
We had an attorney in Illinois who owned a large home, two story. He hurt his hip, and his wife could no longer climb the stairs to the second floor. They had equity, had the home on the market, but didn’t get a bite. We had explained to him that with the equity he had, he could pay his IRS bill in full. Although he didn’t like hearing that, he knew we were telling him the truth. We waited in the wings for nearly two years, for him to sell, so we could finalize everything with the IRS. After selling he called us, and stated he didn’t realize how long it would take, and thanks for sticking around to solve his problem, that “You earned every dime of your fee, by being honest with me”.