The way you address any outstanding taxes is to simply pay them. You can do this by paying off the taxes using your own cash. Or if you don’t want to pay out of pocket you can use the money from the sale of your house to pay off the debt. A problem occurs if the sale price isn’t high enough to cover your mortgage and taxes.
Remember that no matter what situation you find yourself in, you always have options. This guide will offer you trusted and professional advice to get the best result out of your house sale, even if you have money owing.
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The property taxes are normally paid at closing. They are paid from cash used to buy the house. The most common way to handle them is to prorate the property taxes.
Every time I have bought a house, the property taxes are paid by the buyer and the seller. The property taxes are prorated. This means they are divided according to the time the seller has been in the house for the year it is sold.
Simply put, if the seller has been in the house for 6 months, they will have to pay 50% of the year’s property taxes.
Usually, the seller DOES NOT have to come out of pocket to pay the taxes. Instead, the cash from the sale of the house is used. The seller then gets the remaining amount.
You pay property taxes twice a year – once in the winter and once in the summer. You’ll need to pay all taxes owing when you close the sale. If you sell between the winter and summer seasons, then the latter taxes are prorated to give the buyer of your property a clean slate.
But, if you have delinquent taxes, the county may place a lien – or a claim – against your property, which you’ll need to address before you can close a sale.
Many people would sell a house with property taxes owed. Anyone can fall into debt and find themselves strapped for cash at any time. If you have no means of paying your property tax bills, you may be looking to downsize but need to sell your current home (outstanding fees included).
Another reason why someone might sell a house with property taxes owed is if they obtained it from another source – for example, inheriting it from a relative. In this case, a person may have their own bills to pay and therefore be unable to take on another property in debt.
The most popular way that owners sell a house with outstanding property taxes is to use the sale money to pay those fees. When the sale closes, the money is directed to the mortgage and the lien; any remaining profit is returned to the seller.
In some circumstances, an owner may apply for a “certificate of discharge,” a certificate from the taxing agency. This does not void the debt owed in taxes, but it transfers the debt over to the owner’s names allowing you to sell the house without overhanging obligations on the property.
This method can take time, and you risk your buyer walking away, but if you’re struggling to sell, it could be an option to attract other buyers who are put off by overhanging debts.
One of the best options to sell a house with property tax owing is to sell it to a real estate investor. They have both the time and capital to get you out of a bind; plus, the sight of a lien won’t put them off.
In addition, you won’t have to stress about making costly changes and repairs to your home – often, a realtor will be keen to make a quick cash sale which is beneficial to you both.
You may think it’s a smarter solution to pay property taxes before selling a house. This will present a more attractive option to buyers and, in an ideal world, is probably the best course of action. But circumstances dictate that this is not always possible.
For example, if you’ve fallen behind on your property payments, you may be out of pocket and don’t have the current means to finance those bills. Selling the house with the debts still owing allows you to obtain enough money to cover the costs.
And not paying your taxes before you sell the house doesn’t mean that you’re strapped for cash – you may have other reasons for not wanting to pay the money out of your own pocket.
It could be that you’ve recently made a significant investment, or you have your savings stored somewhere with a high-interest rate. In these circumstances, it may work in your favor to sell the property and pay off the fees with the money you obtain from the sale.
This will be especially true if you’ve inherited a house or obtained it by another method, which means it is not your primary residence. You might have your own property taxes to think about in these circumstances and not want to plow money into a second property.
It really doesn’t matter where you are because you can always sell a property, even when you owe property taxes.
It’s never too late to sell a house with property taxes owing; the important thing is that you pay the outstanding taxes before the sale closes.
You can sell a house with property taxes owing in the same ways you would sell any other house. Of course, if you want to sell it fast, then selling to an investor, aka a cash home buyer, might be the best option. The benefits include:
The sale closes much more quickly. While a non-cash sale involves lenders and can take more than a month to complete – you can close a cash sale in as little as two weeks.
There are fewer fees associated with cash offers. Both buying and selling a house encompasses a lot of expenses, but you can get away from some of them by accepting an all-cash offer on your home. This eliminates the fees of a mortgage, working with a lender, and interest repayments.
You don’t need marketing to complete a cash sale. Numerous places will help you make an all-cash sale, meaning you won’t have to spend time and money on marketing your property. You might assume that this means a lower selling price, but that’s not the case. Even without fancy marketing, you can maximize your sale price and ensure you sell at a fair rate for your property.
Cash buyers are less likely to require a showing. You don’t have to spend hours staging your home to look appealing to buyers.
There are many reasons you might need to sell a house with property taxes owing. One of the easiest ways to do this is through a cash sale, which provides a quick, easier, and minimal cost solution to find you a seller and enable you to pay back any debts.
As a complete solution, we want to give you the ability to look up if you owe any property taxes on your Denver home.
All you have to do is click here and enter your address. Easy, right?
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