Will an unpaid but released tax lien prevent one from getting a mortgage? I always thought the lien would prevent one from getting a loan because the IRS in this case could take the house to pay what you owe. What if the SOL of 10 years runs out on a unpaid federal tax debt and the IRS releases the lien and the debt no longer exists? I understand that unpaid liens stay on your report for 15 years but will a lender care if it's there if it's dead and no threat? TIA.
Shirley, yes an unpaid tax lien will usually prevent you from obtaining a mortgage, even if you remove it from your your credit file. The IRS has 10 years to collect the lien then it is released, unless you signed a waiver to keep the lien indefinately. Also, the cb's will report your lien for 10 years. Hope this helps, Iv
I read the post wrong. I thought she said 'paid lien'. Oops. Yep, that sucker needs to be paid. That's the whole purpose of the lien.
Okay, I'm confused and don't understand the replies. I understand the whole thing about the 10 years unless you sign a waiver.... HOWEVER, if the 10 years passes by and the debt evaporates, you CAN'T pay it off. It's gone. What I'm asking is this: Why, if the SOL is reached and the IRS cannot collect the taxes due, i.e., the debt no longer exists, and the lien is RELEASED, meaning the IRS cannot take your property to pay the taxes because you don't owe them anymore, then why would that affect one getting a mortgage? It's my understanding that the IRS can never come after you for those taxes again once the 10 years has passed.
Shirley, you might want to consult a tax attorney. My accountant did tell me that they can't collect after the SOL.
To take the house they have to pay the mortgage off first. A lien is not the big club they want you to think it is.
I'm just worried that for the last 9 years my husband and I have been perfect textbook credit users. We've been counting the days until the tax debt goes away because maybe then we can buy a co-op or something and stop renting for over 1K a month in NYC. To think that even when that debt goes we still may not be approved because an unpaid but released lien is enough to make my stomach sick. We'll see.
