New-PTR-Logo

Call for free Tax Review

Can You Buy a House If You Owe Taxes?

Picture of Alisson Ward

Alisson Ward

Tax Professional | Content Writer

Can You Buy a House If You Owe Taxes

The Desire for a Home

Owning a home is a cherished goal for countless individuals and families. It’s a place where memories are made, and a sense of belonging is cultivated. However, the path to homeownership can be filled with hurdles, and one such obstacle is having unpaid tax debt.

The Impact of Tax Debt

Before we delve into the possibility of buying a house while owing taxes, it’s crucial to comprehend the consequences of unpaid tax debt:

  • Tax Liens: Unpaid taxes can lead to the placement of tax liens on your assets, including property. These liens serve as claims by the government on your property until the tax debt is satisfied.
  • Credit Implications: Owing taxes can negatively affect your credit score, potentially making it more challenging to secure a mortgage loan with favorable terms.
  • Debt-to-Income Ratio: Lenders assess your debt-to-income ratio when considering your eligibility for a mortgage. Significant tax debt can skew this ratio unfavorably.

Can You Buy a House If You Owe Taxes?

Yes, it is possible to buy a house if you owe taxes. However, achieving this goal may require careful planning, financial management, and professional assistance.

Prioritizing Tax Debt Resolution

The first and foremost step is to prioritize the resolution of your tax debt:

  • Consult Tax Professionals: Seek guidance from tax professionals, such as Priority Tax Relief, to assess your tax situation, understand the outstanding debt, and explore options for resolution.
  • Installment Agreements: In some cases, you can establish installment agreements with the IRS to repay your tax debt over time. This can demonstrate your commitment to addressing your tax obligations.
  • Offer in Compromise: Depending on your financial circumstances, you may qualify for an Offer in Compromise (OIC), which allows you to settle your tax debt for less than the full amount owed.

Improving Your Credit

Managing and improving your credit is another vital aspect of buying a house while owing taxes:

  • Review Your Credit Report: Obtain a copy of your credit report and review it for any inaccuracies or discrepancies related to your tax debt. Dispute any errors you find.
  • Build Positive Credit History: Consistently make on-time payments on your existing debts and consider strategies to build positive credit history.
  • Reduce Other Debts: Lowering your overall debt load, aside from your tax debt, can positively impact your debt-to-income ratio and improve your creditworthiness.

Preparing for Mortgage Approval

To secure a mortgage while owing taxes, you must meet lender requirements:

  • Stable Income: Lenders typically require proof of stable and sufficient income to cover your mortgage payments.
  • Down Payment: Ensure you have the necessary funds for a down payment, which varies depending on the type of mortgage.
  • Debt-to-Income Ratio: Work on reducing your debt-to-income ratio to meet lender standards. This may involve paying down other debts in addition to your tax debt.

Conclusion

Owing taxes can present hurdles on the path to homeownership, it is indeed possible to buy a house. By prioritizing tax debt resolution, improving your credit, meeting lender requirements, and seeking professional assistance from Priority Tax Relief, you can turn your homeownership dream into a reality. Don’t let tax debt stand in the way of your home sweet home.

I acknowledge that by clicking “SUBMIT” I agree to be contacted via telemarketing calls and/or SMS/MMS text messages via telephone, mobile device and/or email. By doing so I waive any registration to any state, federal or corporate Do Not Call registry. I understand that calls to me and from me may be recorded for quality assurance purposes. I agree to receive approximately 10 messages every month and understand message & data rates may apply. Case results vary and are specific to each applicant qualifications. Call for complete details.
Get a free tax consultation:

Get a free tax consultation:

Do you have any unfiled tax returns?

Table of Contents

Need expert help? Looking to get back on track?