What happens when inheriting home with federal tax liens? Need advice on transfer options

Having dealt with similar situations in the past, I can offer some guidance on federal tax liens and property transfers. When a property has federal tax liens, those liens follow the property regardless of ownership changes. The IRS has a legal claim against the property until the tax debt is paid or expires. Federal tax liens generally have a 10-year collection statute of limitations from the date of assessment (not the recording date). However, the IRS can refile or extend these liens in certain circumstances, which might explain why they're still showing up. You should contact the IRS directly to verify the current status of these liens. As for the transfer, you have several options: For pre-death transfers, you could negotiate with the IRS for a lien discharge, which would allow the property to be transferred free of the lien. Alternatively, you could take the property "subject to" the lien, meaning you get the property but the liens remain attached. For inheritance, the liens will remain with the property after your father's passing, but you may have more options for dealing with them through the estate settlement process.

After dealing with a similar situation with my mom's house, I found this amazing tool called taxr.ai (https://taxr.ai) that really helped me understand the tax implications. I was so confused about property transfers and tax liens, and traditional sources weren't giving me clear answers. The service analyzed my specific situation with the tax liens on my mom's property and explained exactly what would happen if we transferred before vs. after her passing. It even identified that one of the liens had actually expired but hadn't been properly removed from the records. Saved us thousands in unnecessary payments! They have specialists who understand both IRS procedures and real estate law, which was exactly what I needed for this complicated situation.

Just wanted to follow up about taxr.ai - I decided to try it despite my skepticism, and I'm genuinely impressed. I uploaded my dad's tax lien documents and property information, and they helped me discover that one of his liens had actually been satisfied years ago but never removed from the county records! They walked me through the exact process to file for a Certificate of Release with the IRS and provided templates for all the necessary letters. Saved me from paying a $5,000 tax bill that was technically already resolved. They also explained our options for the valid remaining lien in terms I could actually understand. Definitely worth checking out if you're dealing with tax liens like these.

After spending WEEKS trying to get through to someone at the IRS about my father's tax liens on his property, I finally discovered Claimyr (https://claimyr.com). You can see how it works here: https://youtu.be/_kiP6q8DX5c It was a total game-changer! They got me connected to an actual IRS agent within 15 minutes when I had been trying for DAYS on my own. The agent was able to verify the status of both liens on my dad's property, confirm that one had reached the 10-year statute of limitations, and start the process to get it removed. For the other active lien, they connected me with the right department to discuss payment options and property transfer implications. Saved me literally weeks of frustration!

I have to apologize for calling Claimyr a scam. After another week of failed attempts to reach the IRS, I broke down and tried it - and wow, it actually worked exactly as promised! Got connected to an IRS agent in about 20 minutes when I had been trying unsuccessfully for a month. The agent confirmed that my father's older tax lien had indeed expired and should have been removed from the records. They initiated the process to file a lien release certificate that will clear the county records. For the newer lien, I was able to set up a consultation with their Offer in Compromise department to see if we qualify for a reduced settlement before transferring the property. This could save us tens of thousands of dollars. Definitely worth it when dealing with something as important as property transfers and tax liens.

One option you might consider is applying for a Certificate of Discharge. This basically removes the lien from a specific property while the tax debt remains. If the property value exceeds the lien amount significantly, the IRS might be willing to discharge the lien to allow the transfer. My parents were in a similar situation, and we were able to get a partial discharge by demonstrating that the IRS would eventually collect more through an installment agreement than they would by forcing a distressed sale of the property. Contact the IRS Advisory Group in your region - they handle these requests and can guide you through the process. Form 14135 is what you'll need to start.

Has anyone considered the gift tax implications here? If your father transfers the house to you while he's alive, that's considered a gift and could trigger gift tax issues depending on the value.

This is such a complex situation, and I really feel for you dealing with all these moving pieces at once. Based on what others have shared here, it sounds like getting clarity on the actual status of those liens should be your first priority. Since the liens are supposedly past the 10-year mark but still showing up, there might be some administrative issues that need to be resolved. As others mentioned, the IRS can extend or refile liens in certain circumstances, but they also sometimes fail to properly remove expired ones from county records. One thing I haven't seen mentioned yet is that you might want to order a complete title report from a title company rather than just having your real estate agent check. Title companies have access to more comprehensive records and can often spot discrepancies that might not show up in a basic search. Also, since this property is currently in your father's trust, you'll want to make sure any transfer strategy aligns with the trust documents. Sometimes trusts have specific provisions about how debts and liens are handled that could affect your options. The timing question is really important too - inheriting vs. receiving as a gift has very different tax implications as others have pointed out. You might benefit from consulting with both a tax professional AND an estate planning attorney to make sure you're considering all angles before making this decision.

I want to add another perspective on the timing consideration that might be helpful. When dealing with federal tax liens on inherited property, there's actually a little-known provision called the "innocent spouse" or more accurately in this case, "innocent heir" concept that can sometimes apply. If you inherit the property after your father's death, you may have stronger grounds to negotiate with the IRS since you weren't responsible for creating the tax debt. The IRS collection division sometimes treats inherited tax debts differently than transferred ones, especially when the heir demonstrates good faith efforts to resolve the situation. However, there's also the practical consideration of your father's ongoing mortgage issues. If he's already behind on payments, waiting for inheritance might mean losing the property to foreclosure before you ever get the chance to deal with the tax liens. One middle-ground approach might be to have your father add you to the deed now (making you joint owners) rather than a complete transfer. This could give you legal standing to work with both the mortgage company and IRS while he's still alive, but might also complicate the eventual inheritance tax benefits others mentioned. Given the complexity, I'd strongly recommend getting that title report others suggested AND having a consultation with a tax resolution specialist before making any moves. The $120K in liens is substantial, but if the property value significantly exceeds that amount, you have negotiating power with the IRS that you'll want to use strategically.

I've been through a similar situation with my grandmother's property that had both tax liens and mortgage issues. One thing that really helped us was getting a certified copy of the lien documents directly from the IRS rather than relying on county records. Sometimes what shows up in title searches includes liens that have been released but not properly updated in local databases. We discovered that the IRS has a specific department (Advisory Group) that handles lien releases and property transfers. They were actually more helpful than I expected once we got through to the right people. The key was having all the documentation ready - the original assessment dates, any payment records, and proof of the 10-year statute limitations. For the mortgage situation, don't overlook the possibility of a loan assumption. Some lenders will allow a family member to assume the existing mortgage (especially if you can demonstrate ability to make payments) while you work through the lien issues separately. This could buy you time to resolve the tax problems without losing the house to foreclosure. Also consider that if the liens are truly expired, you might be able to get a quiet title action through the courts to clear them from the property records, though this can be expensive and time-consuming. The most important thing is acting quickly on both fronts - the mortgage arrears and getting clarity on the lien status. Time is really your enemy here with foreclosure proceedings potentially moving forward regardless of the tax lien situation.

I'm dealing with a very similar situation with my uncle's property right now, and I wanted to share something that might be helpful. We discovered that the IRS has a specific form (Form 12277, Application for Withdrawal of Filed Notice of Federal Tax Lien) that can be used when liens were filed in error or have expired but haven't been properly removed from public records. What's particularly relevant to your situation is that we found out the IRS sometimes continues to show liens in their systems even after the 10-year collection period has expired, especially if there were any actions that legally extended the collection period (like offers in compromise, collection due process hearings, or bankruptcy filings). These extensions aren't always obvious from the original lien documents. Here's what I'd suggest based on our experience: First, request a complete Account Transcript from the IRS for your father's tax years in question (Form 4506-T). This will show the actual assessment dates, any payments made, and importantly, any actions that might have extended the collection statute of limitations. You'll need your father's authorization for this, but it's crucial information. Second, if you do find that the liens have truly expired, the Form 12277 process can be much faster than a quiet title action and costs nothing beyond the time to prepare the paperwork properly. Regarding timing of the transfer, one consideration I haven't seen mentioned is that if your father is elderly or in poor health, Medicare/Medicaid lookback periods might come into play. Transferring a valuable asset within 5 years of potentially needing long-term care could create eligibility issues. The mortgage situation definitely needs immediate attention regardless of the lien issues. Many servicers have forbearance programs that can pause payments for 3-6 months while you sort out the ownership and lien questions, which might give you the breathing room you need to make informed decisions rather than rushed ones.