What Impact Does A Tax Sale Have On Me?

Most people are familiar with what a foreclosure is, especially in a hard hit housing market where most homeowners probably came close to losing their homes to the bank. A tax sale is in the same ballpark as a foreclosure only it’s not the bank that is taking the property owner’s home to settle a back debt but the government. There are two different ways the government can come after and seize your property for a tax sale. The local county government and the IRS can both use this method to get back taxes out of you and if you don’t have it, the house can be seized and sold to pay the bill.

The good news-the IRS is probably not very likely to come after your house if its your primary residence and you owe back taxes for a few reasons. First the IRS doesn’t want the bad publicity these seizures generate and secondly the taxpayers are protected from the IRS seizing their homes in the Taxpayers Bill of Rights. That doesn’t mean they can’t do it, it just means due process has to occur first. What that boils down to is the IRS has to take you to court and get a court order and you have a right to contest the action. However if you hope to win this battle you will have to show the judge you are attempting to cooperate with the government to pay your back taxes. Throwing away their letters and ignoring their phone calls may push it to the last resort- seizing your home.

Another way the government may end up seizing your home or land is if you owe back property taxes. When a tax payer fails to pay the property tax due on their home, the local county government can begin the procedure to seize the home to settle the outstanding tax lien. Usually homes that are seized for back taxes are pretty far behind the eight ball, so the amount owed compared to the value of the house may be small but it may be more than the home owner can come up with. Most of the time the government will let a home go one to two years before they make this drastic move to take a home to auction and the home owner has a period of time where they can still come up with the back amount owed including fines and interest and save their home.

Once this period of time has passed however the home will be put up for public tax sale auction on the steps of the courthouse and your home will be sold to the highest bidder, likely site unseen if you are still living in it. These sales appeal to investors who figure on buying low and dumping money into the home to make it saleable at a higher price down the road.