Selling a House With an IRS Tax Lien Attached
2 min read · Last updated 2026-08-03 · Reviewed by Camilo Palacio, Licensed Florida Real Estate Professional (License #3280644, REALTOR®)
Yes, you can sell a house with an IRS tax lien on it, but the lien has to be paid off, subordinated, or discharged before or at closing, because a federal tax lien attaches to the property itself, not just to you. Most sellers use the sale proceeds to satisfy the IRS at the closing table. Cash Flow Deals is one option for sellers who want the tax debt cleared through the same transaction as the sale.
| Factor | Traditional Route | Cash Flow Deals |
|---|---|---|
| Who identifies the lien | Buyer's title company flags it during title search, sometimes late in the process | Net price review checks recorded liens before an offer is finalized |
| Who pays it off | Seller pays from proceeds at closing, or applies for an IRS discharge separately | Same requirement; lien payoff comes out of the locked net price, not added on top |
| Timeline risk | A late-discovered lien can delay or kill a closing already in progress | Lien is addressed before repairs are scoped, reducing late surprises |
| IRS discharge filing | Seller or their agent files Form 14135 directly with the IRS | Same federal filing requirement applies regardless of buyer |
What a Federal Tax Lien Actually Attaches To
A federal tax lien exists the moment the IRS assesses a tax debt, sends a bill, and the taxpayer doesn't pay it in full within the required time. Under federal law, that lien attaches automatically to everything the taxpayer owns or later acquires, real estate, vehicles, and bank accounts, not just one house. The IRS then files a public Notice of Federal Tax Lien, which is what shows up on a title search and alerts a buyer's title company to the debt.
Getting the Lien Off Title Before Closing
Removing the lien from one specific property, without paying off the entire tax debt, requires an IRS Certificate of Discharge, filed on Form 14135. The IRS's own guidance in Publication 783 recommends submitting that application at least 45 days before the expected closing date, since the agency needs time to review the property's value against the debt. Accepted grounds for discharge include proving the property remaining under the lien is worth at least twice the tax debt, or agreeing to hold the sale proceeds in escrow for the IRS instead of releasing them at closing.
Discharge vs. Subordination: Two Different Fixes
A discharge and a subordination solve two different problems. A discharge removes the lien from one piece of property entirely, clearing title so the sale can close. A subordination doesn't remove the debt at all, it just moves the IRS's claim behind another lender's claim, usually so a new mortgage or refinance can be recorded ahead of the tax lien. Selling a house outright almost always calls for a discharge, not a subordination, since the goal is a clean transfer of title to the buyer.
What Happens If the Lien Isn't Resolved
If a federal tax lien isn't resolved before closing, the sale doesn't legally clear the property of that debt. A buyer's mortgage lender will not fund a loan on a property with an unresolved lien ahead of their own in priority, and title insurance won't issue a clean policy. In practice this means the closing gets delayed or cancelled until the lien is addressed, which is why title companies flag liens as early as possible in a transaction.
Where Cash Flow Deals Fits
Cash Flow Deals is a real estate investment company built around net-price certainty, which matters directly to a seller carrying a federal tax lien. The process runs like this. First, request a net-price review that accounts for any recorded liens against the property. Second, if an IRS discharge or lien payoff is needed, that gets built into the closing timeline instead of surfacing as a surprise late in the deal. Third, the transaction closes through a licensed local broker partner as a novation-based, flat-fee process, with title transferring once, directly from seller to buyer, and the lien payoff handled at the closing table like any other debt secured by the house.
Common questions
Can I sell my house if the IRS has a lien on it?
Yes. A federal tax lien doesn't block a sale, it just has to be paid off, discharged, or otherwise resolved before or at closing, usually out of the sale proceeds.
How long does an IRS discharge of lien take?
The IRS recommends applying at least 45 days before your expected closing date using Form 14135, since the agency needs time to review the property and the debt before approving a discharge.
What's the difference between a lien discharge and a lien withdrawal?
A discharge removes the lien from one specific property so a sale can close. A withdrawal removes the public Notice of Federal Tax Lien entirely, which the IRS may grant after the debt is paid in full or under certain Fresh Start program conditions, but a withdrawal isn't required just to sell one property.
Does the IRS get paid before my mortgage lender at closing?
Priority depends on which lien was recorded first. A mortgage recorded before the IRS filed its Notice of Federal Tax Lien generally has priority over the tax lien. Confirm the actual filing dates and priority order with the title company handling your closing.
Can I close if the sale price doesn't cover the full tax debt?
Sometimes, through the same escrow-based discharge process used for other short payoffs, where the IRS agrees to release its lien from the property in exchange for the sale proceeds being held for its review, even if that amount doesn't cover the full tax debt. Approval isn't automatic and depends on the case.