Can I Buy a Home With an IRS Tax Lien On It?

Reader Question: Is it possible for one to buy a home if they have a lien on them from the IRS?

The typical path to buying a tax lien property is through an auction, after the lien holder forecloses on the home. I would not recommend this for a first-time home buyer. It's a technique that seasoned real estate investors use to get properties on the cheap, but you have to know what you're doing.

A tax lien is a form of ownership on the property. In the case of an IRS lien, it means the homeowner has failed to pay taxes in the past -- most likely their property taxes. So the IRS put a lien on the house. If and when the home is sold (through a real estate auction or any other process), the IRS gets their money back from the lien they put on the house.

If you're seriously considering buying a house with a tax lien on it, you've got some more homework to do. Here's an article on the Wall Street Journal website that explains how the overall process works. The article is dated though, so you'll need to find some current research materials.