You owe back taxes on your house. You need to sell. The question keeping you up: does the tax debt kill the deal?
It doesn’t. You can sell a house with unpaid property taxes, a delinquent IRS balance, or a tax lien attached. The sale doesn’t erase the debt — closing does.
TL;DR
You can sell. Back taxes come out of your sale proceeds at closing — you don’t pay them beforehand. The one time this gets complicated is when you owe more than the house is worth. Submit your address on this page or call (615) 780-7349 and we’ll give you a cash offer within 24 hours.
What actually happens to back taxes when you sell
When you close on a sale, the title company runs a title search and pulls every lien against the property — including property tax delinquencies. Before the deed transfers, those recorded liens must be paid or released.
In practice: the back taxes come off the top of your sale proceeds at the closing table. The title company writes the check directly to the taxing authority. You get what’s left.
You do not need to pay the taxes before listing. You do not need to pay them before accepting an offer. They settle at closing, the same way a mortgage balance does.
Property taxes and IRS taxes are not the same thing at closing
Most sellers dealing with this are in one of two situations, and they resolve differently.
Unpaid property taxes are owed to your county or municipality. In Tennessee, property taxes are due October 1 and become delinquent on March 1 the following year under TCA § 67-5-2010. After that, penalties of 1.5 percent per month start running. After three years of delinquency, the county can initiate a tax sale — a forced sale of the property to recover the debt. If you’re in Middle Tennessee and this deadline is close, here’s how a cash sale in Nashville works.
In Texas, property taxes are due January 31 and delinquent February 1. Texas Tax Code § 33.01 attaches a 6 percent penalty immediately, then 1 percent per month through June. Tax sales in Texas typically run March through June. Unlike most states, Texas gives no right of redemption once a non-homestead property sells at tax auction — the deadline is the deadline.
In Florida, property taxes are due November 1 and delinquent April 1. The county sells tax certificates in May to investors who pay the debt in exchange for the right to collect it later with interest. Two years after a certificate is issued, the holder can apply for a tax deed, which forces a sale of the property. That window — from delinquency to tax deed — is longer than Texas, but in Florida the outcome is the same: you lose the property without a dime if the process runs out.
IRS tax liens are a different animal. They arise from unpaid federal income taxes — not property taxes. When the IRS files a Notice of Federal Tax Lien (NFTL), it creates a claim against all your assets, including real property. The IRS can discharge a lien on a specific property through a Certificate of Discharge under 26 U.S.C. § 6325(b), releasing the lien so a sale can proceed. That process typically takes 30–60 days, so if you’re selling against a hard deadline, flag an IRS lien immediately rather than waiting for the title search to surface it.
A cash buyer can close faster than a financed buyer on both types of liens — there’s no lender layering requirements onto an already complicated title.
The one scenario where it gets complicated
If the total you owe — taxes, penalties, interest, mortgage balance — exceeds what the house will actually sell for, you have a shortfall. Closing doesn’t create money that isn’t there.
In that case, you have a few paths: negotiate a partial payoff with the taxing authority (some counties accept less than the full delinquency in documented hardship cases), pursue a short sale if a mortgage lender is involved, or make peace with a zero-net close where you walk away without proceeds but free of the property.
This situation is less common than it sounds. Back property taxes are usually a fraction of home value. But it’s real for houses with years of delinquency, compounding penalties, and a soft local market.
If you’re not sure whether your equity covers what you owe, a title company can run the numbers before you commit to anything. We can also walk through it with you — call (615) 780-7349.
Can a buyer find out about the back taxes before closing?
Yes — and they will. Property tax delinquencies and recorded tax liens are public record. Any buyer running title will see them. This isn’t something to manage strategically; the title process surfaces it automatically.
For a financed buyer, the lender may require the taxes be paid before closing or a payoff letter from the county. For a cash buyer, the taxes come out of proceeds at closing without that extra layer. That’s part of why sellers facing back taxes often prefer working with cash buyers — fewer moving parts when the title is already complicated.
Three steps, then you’re done
- Submit your address on this page or call (615) 780-7349 — we pull the full tax and lien picture as part of our review
- We give you a cash offer within 24 hours — the offer accounts for what’s owed, so you see the net number before deciding anything
- You pick the closing date, typically 7 to 14 days — the title company pays the back taxes at closing from the proceeds
No obligation at any step.
Straight answers
Can I sell if property taxes are years behind?
Yes, as long as a tax sale hasn’t completed and any redemption period hasn’t expired. Once the taxing authority has transferred the property and the redemption window has closed, ownership is gone. Before that point — even deep into delinquency — the house is still yours to sell. If the deadline is soon, here’s what a fast sale before a forced sale looks like.
Does selling wipe out my IRS debt?
No. An IRS lien on this property gets paid from the proceeds, but any remaining federal tax liability follows you as an unsecured debt. The sale clears the lien from that property; it does not eliminate what you owe the IRS. If your IRS debt exceeds the property equity, talk to a tax attorney before closing.
Do I need cash to pay the taxes before closing?
No. Back taxes are settled at closing from your proceeds. You don’t need money out of pocket before the sale.
What if I’m already on a payment plan with the IRS?
An existing installment agreement doesn’t block a sale. The IRS must agree to discharge the lien on the property — they do this when proceeds cover the lien amount. A tax attorney handles the Certificate of Discharge request, and it typically takes 30–60 days.
Will unpaid property taxes show up on my credit report?
Property tax delinquencies aren’t directly reported to credit bureaus the way credit card or mortgage debt is. However, if a county sells a tax certificate or pursues a tax deed, that legal action may appear in public records that some credit models reference.
When selling to us is not the right answer
If you have meaningful equity above what you owe, the house is in good condition, and you have 60 or more days before any tax sale deadline, listing with an agent will net you more. The commission is 5–6 percent, but on a healthy equity spread the math works in your favor.
We’re the better option when time is the real constraint — when you’re close to a tax sale date, when the house needs repairs you can’t fund, or when the agent process adds risk to a situation that’s already complicated enough.
We buy houses directly, and where we’re not the right buyer, we’ll bring you one who is. We’ve bought more than 100 houses. No fees, no commissions, no repairs required. The back taxes get paid at closing the same way any title company handles them.
Submit your address on this page or call (615) 780-7349. Cash offer in 24 hours.