The Deal Killer: How to Remove an IRS Tax Lien from Your Riverside Home

The Riverside real estate market has been a rollercoaster of equity growth. For many residents in Corona, Temecula, and Murrieta, their home is not just a place to live – it is their primary financial safety net. However, if you have unpaid back taxes, the IRS can lock down that equity with a Federal Tax Lien.

A tax lien is often called a “silent deal killer.” You may not even realize how severely it affects you until you try to refinance your mortgage to get a lower rate or attempt to sell your home. Suddenly, the title company flags the lien, and the entire transaction grinds to a halt.

Understanding the “Notice of Federal Tax Lien”

The IRS sends a Notice of Federal Tax Lien (NFTL) to the Riverside County Recorder’s office to alert creditors that the government has a legal right to your property. This is public record. It destroys your credit score and scares off lenders.

Crucially, paying the debt in full is not the only way to remove it. If you need to leverage your property immediately but cannot pay the full tax bill today, you have three powerful options:

1. Lien Subordination (The Refinance Saver)

If you are trying to refinance your Riverside home to get cash out or lower your payments, lenders will generally refuse if the IRS is in “first position.” The IRS “trumps” the new mortgage.

However, we can file for a Certificate of Subordination. We argue to the IRS that allowing the refinance is in their best interest because it either allows you to pay them a lump sum from the cash-out or lowers your monthly mortgage payment, making it easier for you to afford a monthly tax installment plan. If approved, the IRS steps back into second position, allowing the loan to close.

2. Lien Discharge (The Sale Saver)

If you are selling your home, the lien stays with the property unless it is “discharged.” Buyers will not purchase a home with an attached IRS lien.

We can apply for a Certificate of Discharge (Form 14135). This allows you to sell the property free of the lien. The catch? The IRS generally requires that they receive the proceeds from the sale up to the amount of the lien. However, we ensure that closing costs and senior mortgage payoffs are handled first, ensuring the sale actually goes through.

3. Lien Withdrawal (The Credit Repair)

This is the “Holy Grail” of lien removal. A withdrawal removes the Notice from public record as if it never happened. You generally qualify for this if:

• You owe less than $25,000.
• You enter into a Direct Debit Installment Agreement (DDIA) to pay off the debt in 60 months.
• You have made three consecutive payments.

Once we secure the withdrawal, we send the document to the credit bureaus to repair the damage to your credit report immediately.

Don’t Let a Lien Trap You

Navigating the Lien Unit of the IRS requires precise paperwork. A denied application can delay your real estate closing by months. At Kugelman Law, we prioritize these cases because we know real estate deals have strict deadlines. Contact us to clear your title and your name.