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Merlo
Merlo, Accountant
Category: Tax
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My father has a 125k fed tax lien and 25k state tax lien against

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My father has a 125k fed tax lien and 25k state tax lien against his property for income tax he did not pay over a coarse of ten years. He and my mom are both on the deed for thier property and she wants to sell the house and separate from him but is not sure wether she will be able to recieve her part of the equity (total equity would be between approx 60k)? She has been filing her taxes married filing singley for the past ten years b/c she did not agree with what he was doing. So the question is, can she even sell her house or will the lien prevent the closing of any deal that wouldn't fully fullfill the tax lien? If she is able to sell can she recieve her equity or will the IRS step in and take it all?
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello wstearn,

 

The tax attorney is correct that there is no way to know for absolute certain whether or not the lien would also attach to your mother's interest in the property. However, it is not likely your mother's interest in this property would be subject to the lien.

 

As a general rule, the value of the taxpayer's interest in entireties property will be deemed to be one-half. I have based this on the assumption that they live in NC which is not a community property state, as community property states do have different rules. That being the case, only one half of the property's sale price would generally be subject to the tax lien and your mother should still receive her share of the sale proceeds. I am also assuming here that this tax liability is strictly a liability of your father, and does not arise from a year when they filed a joint tax return.

 

You can refer to the following IRS legal reference regarding tax liens. In particular, refer to the section entitled Tenancy by the Entirety which covers property jointly owned by a husband and wife.

 

http://webcache.googleusercontent.com/search?q=cache:rsolP4UglzYJ:www.irs.gov/irm/part5/irm_05-017-002.html+irs+tax+lien+spouse+joint+owner&cd=2&hl=en&ct=clnk&gl=us

 

If this was helpful please press the Accept button. It is the only way we receive any credit for helping with these questions.

 

Thank you

 

 



Edited by Merlo on 9/1/2010 at 11:15 PM EST
Customer: replied 4 years ago.

can they sell their property? I know that they can't get enough money to pay off all 150 in liens, will they be able to convey fee simple marketable title?

Expert:  Merlo replied 4 years ago.

Hello again wstearn,

 

I can only try to help you with tax related issues, and could not comment on the marketability of this title. Although generally the existence of a lien does not make the title not marketable. It just means that the lien holder must first be paid from the proceeds of the sale.

 

Your original question asked if they were to sell the property if your mother would be allowed to retain her share of the equity in the home. As long as they are not living in a community property state and as long as this is not a joint tax liability of both spouses, then your mother should still receive her 50% of the equity in the home, or $30,000. The other $30,000 would be applied against the tax debt owed by your father.

 

If this was helpful please press the Accept button.

 

Thank you

 

 



Edited by Merlo on 9/1/2010 at 11:43 PM EST
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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